The Church Financial Year – what happens when?

To assist you in planning your role as Treasurer we have prepared a summary of the Church Financial Year, from a Treasurer’s perspective. Please see the document below:

Financial Procedures

The tabs below take you through some of the day-to-day processes involved in managing and recording the finances of a parish.

If you would like advice on any area of parish finance please speak to your Area Finance Adviser.

There are many different banks which offer accounts for not-for-profit organisations such as churches. When it comes to banking as a charity there are two main areas to consider: is the account right for my needs and am I appropriately safeguarding access to the funds held there.

When looking at whether an account is right for your needs you will want to think about:

Ease of access
What services are offered (e.g. cheques, online banking, debit card etc.)
Ease of depositing cash/cheques
The cost of the account
The interest on the account if you are trying to save
Most high street banks will offer these services. For general banking you may also wish to consider these specialist banks.

When looking at whether you are appropriately safeguarding the funds there are multiple issues to think about and detailed guidance can be sought from your Area Finance Adviser. However, there are some overarching themes:

  • Ensuring only appropriate people have access to/can withdraw from the account
  • Ensuring that at least 2-3 people have access in case of emergencies
  • Where possible requiring two authorisations to make payments*
  • Banking cash & cheques as soon as possible
  • Performing monthly reconciliations between bank statements and accounts

*Most banks facilitate dual authorisation for cheques. CAF Bank also facilitates dual authorisation for online payments.


Parishes have the right to borrow money from any reputable lender, however you will likely find that high street banks/lenders do not understand the structure of parishes and are therefore reluctant to provide funding. View a list of banks that specialise in banking for and lending to churches/charities.

Bookkeeping is an essential part of the management of the church accounts. The books are a record of all the income and expenditure and keeping good records reduces the risk of unexpected cash flow issues and vulnerability to fraud.

When asked by churches how they should complete their bookkeeping as Finance Advisers we often say that there are two considerations:

  1. are the records in good order?
  2. could they be easily understood by someone else?

A significant challenge that often faces new church treasurers is attempting to understand the bookkeeping of the previous treasurer. For example, many churches record their bookkeeping on a spreadsheet program such as Microsoft Excel. Whilst this is acceptable, you should also consider how a new treasurer, with little or no accounting experience, might cope if they had to take over your bookkeeping.

Taking this into account, and as some churches wish to use professional bookkeeping software, there are various options on the market for church accounting/bookkeeping, some of which are listed below – these are not recommendations but are all suitable for church finances. The PCC is however free to use any suitable package. Any package purchased should be registered in the name of the PCC and remains the property of the PCC. It is important to ensure that, whether using a package or an excel sheet, if it is cloud based other people have a password and, if it is located on one PC, regular backups are made and stored in another location which is known to at least the churchwardens and incumbent.

  • Finance Coordinator – widely used, and provided by Data Developments. This is an offline (no internet based) program which is fairly easy to use.

Recently some web (cloud) based alternatives have become available. These include (but are not limited to):

  • ExpensePlus – a program created by ex-church treasurers
  • Liberty Accounts – a program adapted for CofE churches from a company software. This includes the option for including payroll.
  • Xero – a well-known business bookkeeping program which has adapted to charity accounting

When selecting a package it is also important to consider whether a new treasurer (especially one without accountancy experience) would be able to use it.

Good financial management of a parish will naturally involve forecasting income and expenditure and monitoring progress against these forecasts throughout the year. As a result budgeting is an essential task for the treasurer and the PCC.

Most PCCs will budget on an annual basis, usually in autumn for the following year, and will need to carefully balance the need to ensure the financial sustainability of the charity whilst striving to grow the resources and mission of the parish.

A good starting place for planning the budget for the next year is by looking at the current year’s income and expenditure and attempting to forecast what these will be next year. Once you have done this you, along with the PCC and guided by the incumbent, should consider what you want to add or remove in line with your missional priorities. Once you are happy with the budget the PCC should have a formal vote to approve it for the following year.

Throughout the year it is good to include an update on income and expenditure against the budget at any finance update. This allows the PCC (or standing/finance committees) to see where they are overspending or have a surplus. As well, in cases of tighter finances, this will highlight when the parish is in danger of running into cash flow difficulties.

All PCCs are charities in their own right and PCC members are therefore charity trustees.

If a PCC has an annual income of over £100,000 it is required to register with the Charity Commission.

PCCs with income of less than £100,000 are not required to register and are excepted from the duty to register.

The Parish Resources website has a detailed step-by-step guide to registration and PCCs are strongly recommended to use this guide as it contains wording agreed between the Church of England and the Charity Commission. The guide is available here.

Following registration PCCs will need to complete an annual return and upload their report and accounts by 31st October each year. A reminder will be e-mailed by the Charity Commission to the contact e-mail address they hold. It is important that the return is completed on a timely basis as late submission is publicly recorded on the PCC’s entry on the Charity Commission website.

The Charity Commission return is an entirely separate return to the diocesan annual return and upload of the annual report and accounts which must be completed by the end of June each year.

Once registered you will receive a charity number which must appear on all parish paperwork, all notices (including a cheque book if you have one) and your website.

Clergy, staff and volunteers should be reimbursed in full in respect of agreed expenses wholly and exclusively incurred in respect of the PCC’s charitable objects.

Clergy expenses should be reimbursed against receipts, preferably on a monthly basis but at least quarterly. There is Church of England guidance on what are eligible clergy expenses.

Expenses outside of those indicated in the guidance may be classed as a taxable benefit, and incur a tax liability and the need for the PCC to produce a P11D and to pay Class 1A National Insurance contribution. Full details are in the clergy expenses book.

Lump sum payments should not be made in respect of expenses as these are likely to incur a tax liability.

Expenses reimbursed to staff and volunteers should be made against a claim form and receipts.

All expenses should be paid by BACS or by cheque. Cash should only ever be used for very small amounts and the recipient should sign a receipt. All expenses claims should be authorised in line with the PCC’s written financial policies.

All PCCs are charities which means all PCC Members are the trustees of the charity. This comes with the legal responsibility to ensure good financial management.

Financial controls are rules put in place by a PCC that direct PCC Members and parish staff/volunteers on how to handle the financial resources of the parish. They ensure that everyone is using the resources available to them in an appropriate and legal way.

The Area Finance Advisers have put together a booklet, covering the basics of Financial Controls, which can be downloaded below. The booklet is accompanied by a risk assessment checklist which can also be downloaded.

At the end of the booklet you will find directions to other resources. These include the official Charity Commission guidance found in the document Internal Financial Controls for Charities (CC8). They have also produced an accompanying yes/no checklist which goes through all essential controls.

For further advice about writing or reviewing financial controls please speak to your Area Finance Adviser.

File Downloads

Reserves are the balance of unrestricted funds, including designated funds, being held by a PCC. There is guidance on the Parish Resources website about reserves at including some sample reserves policies.

All PCCs should have a reserves policy even if they currently do not have any reserves. The policy will include the level of reserves being held and why they are being held, or the level that the PCC wishes to hold and any steps being taken to achieve that amount.

The policy should be stated in the Annual Report and Accounts each year.

The PCC will also need to decide where and how any reserves will be invested – this will depend in part on why they are being held and when it is envisaged they will be spent.

The PCC cannot restrict funds; funds may only be restricted by the donor; PCCs may designate funds for particular purposes.

It is best practice for all PCCs to consider the risks to which they are exposed and to take appropriate steps to minimise them. All PCCs with income or expenditure over £250,000 are required to have a policy with regard to the management of risks.

Visit our risk management page.