Set up a Charity Today

A charitable company is a company limited by guarantee (CLG) registered with Companies House as a non-profit structure. After incorporation with Companies House you should then separately registered with the Charity Commission to gain charitable status once its annual income reaches £5,000. It is subject to both company law and charity law, meaning it must file with both regulators. A Charitable Incorporated Organisation (CIO) is a different structure altogether. It only needs to register with the Charity Commission and does not register with Companies House, making it a simpler structure with fewer regulatory filing obligations but without the same contractual standing as a registered company.

A company limited by guarantee becomes a charitable company when it operates for purposes that fall within the 13 charitable purposes recognised by the Charities Act 2011, and when those purposes are for the public benefit. The company must also be structured with articles of association that reflect its charitable objects and meet the Charity Commission's requirements. Registering as a CLG with Companies House gives the organisation a legal identity and the ability to enter into contracts in its own name. Charitable status is then granted by the Charity Commission upon separate registration, once the annual income threshold of £5,000 is met.

Forming a charitable company provides several meaningful advantages. It qualifies the organisation for tax exemptions and reliefs, which significantly reduce operating costs. It increases credibility and public trust, which is important for attracting donors and volunteers. It also makes the organisation eligible for grants and funding streams that are not available to standard commercial companies. Additionally, the CLG structure provides legal protection for trustees and members, meaning their personal finances are shielded from the organisation's liabilities. Together, these benefits substantially strengthen the capacity of a non-profit to pursue its objectives.

The page does not describe the public benefit test in specific detail, but it does reference the 13 charitable purposes recognised by the Charities Act 2011 as the framework for demonstrating charitable intent. These purposes include the prevention of poverty, advancement of education, advancement of religion, advancement of health, community development, arts and culture, amateur sport, human rights, environmental protection, relief of those in need, animal welfare, promotion of the armed or emergency services, and any other charitable purpose. Your organisation's objectives must fall within one or more of these categories and must demonstrably benefit the public, not just a private group of individuals.

A charity company must register with Companies House as a company limited by guarantee. Registration with the Charity Commission is a separate step, required once the organisation's annual income reaches £5,000. The formation service covers the Companies House registration, providing the CLG structure and model articles of association that enable the company to pursue charitable status. The Charity Commission registration is not included in the formation service and must be handled separately. Different commissions apply depending on the region: the Charity Commission covers England and Wales, OSCR covers Scotland, and CCNI covers Northern Ireland.

A charitable company is subject to the rules of both company law and charity law, which means a higher level of compliance than a standard limited company. It must file annual returns and accounts with both Companies House and the Charity Commission. Trustees are responsible for ensuring the organisation operates in line with its charitable objectives, complies with all legal and regulatory requirements, and manages its resources responsibly. The organisation must also maintain governing documents, including a memorandum and articles of association that define its charitable purposes. Once registered with HMRC, it also claim tax reliefs such as Gift Aid on donations.