CIO, charitable company or trust?
Does the charity need to employ, own property or sign contracts in its own name? Will anyone other than the trustees have a vote?
| Needs to act in its own name | Doesn't | |
|---|---|---|
| Wider voting membership | Association CIO, or charitable company | Unincorporated association |
| Trustees only | Foundation CIO, or charitable company | Trust |
Side by side
Whichever you choose, every purpose must be charitable and for the public benefit.
| CIO | Charitable company | Trust | Unincorporated association | |
|---|---|---|---|---|
| Trustees personally liable | Generally no | Generally no | Yes | Yes |
| Owns property, employs and contracts in own name | Yes | Yes | No | No |
| Registers with the Commission | Always, whatever its income | Usually once annual income is over £5,000 | Usually once annual income is over £5,000 | Usually once annual income is over £5,000 |
| How it's set up | The day the Commission registers it | Companies House incorporation | A trust deed (trustees' signatures independently witnessed) or a will | Trustees agree to adopt the constitution, minute it and sign it |
| Companies House | No | Yes | No | No |
| Accounts | Charity law: simple receipts and payments accounts allowed under £500,000 income (years ending on or after 30 September 2026) | Company law; receipts and payments accounts not available | Charity law, as for a CIO | Charity law, as for a CIO |
| Yearly filing with the Commission (once registered), within 10 months of year end | Annual return, accounts and trustees' report, whatever its income, plus any examiner's or auditor's report | Under £10,000: income and spending only. £10,000 to £25,000: annual return. Over £25,000: annual return, accounts, trustees' report and any examiner's or auditor's report. For years ending on or after 30 September 2026, independent examination over £40,000 income (CIOs too), unless an audit is needed | ||
| Governing document | Constitution (Commission model) | Articles of association | Trust deed | Constitution |
Pros and cons
| Pros | Cons | |
|---|---|---|
| CIO | Trustees generally protected from personal liability; can employ, own and contract in its own name; registers and files only with the Commission; no Companies House fees; can register at any income | Must register and file accounts, a report and an annual return every year, whatever its income; can't exist until registered; can hold permanent endowment only as trustee, not as its own property |
| Charitable company | Trustees generally protected from personal liability; exists as soon as Companies House incorporates it; can have a wider membership or not | Registers and files with Companies House, and with the Commission when required; £100 to incorporate online and £50 per 12-month period for the confirmation statement online; company-law accounts; directors verify their identity; "charity" or "charitable" in the name needs a Statement of Non-Objection first |
| Trust | Simple for a grant-maker run by a few trustees; no membership to manage | Trustees personally liable; can't contract in its own name; must start with an asset; deed needs an independent witness |
| Unincorporated association | Set up by agreeing, minuting and signing a constitution; suits a small membership group; once registered, under £10,000 income it only reports income and spending to the Commission | Committee personally liable, including for contracts like hall hire; land must be held by trustees for it; can't register under £5,000 except in exceptional cases |
A community interest company isn't a charity: CIC or charity?
Common situations
Each assumes the purposes are charitable and for the public benefit.
Each assumes the purposes are charitable and for the public benefit.
- A weekly lunch club with volunteers, a hall booking and a few hundred pounds a year
- An unincorporated association may suit, if it will have voting members and the committee is happy to take responsibility for its contracts, such as the hall booking. Under £5,000 income it can't register except in exceptional cases, but it can apply to HMRC for Gift Aid. A CIO can register at any income.
- A foodbank that will lease a unit and take on a paid coordinator
- Consider incorporating. A CIO or charitable company can sign the lease and employ in its own name, so the trustees aren't signing personally.
- A family setting aside money to give grants
- A trust may suit a grant-maker that's unlikely to employ many staff or trade. Its purposes must still be charitable and for the public benefit. The deed must name a sum of money, land or other asset the charity starts with, of any size. Without it, the Commission can't register it.
- A PTA where all parents can vote at the AGM
- Wider membership: an association CIO or a charitable company. An unincorporated association may suit a small PTA with few assets.
- A football club
- Check whether it qualifies as a charity or as a community amateur sports club (CASC) with HMRC. It can't be both.
CIOs
- It's a corporate body but not a company. No Companies House filing.
- It must send accounts and an annual return every year, whatever its income, within 10 months of its year end. The model guidance says it won't be fined for administrative errors like late filing, but some breaches of the CIO regulations are offences.
- It keeps a register of its trustees, and of members if it has a wider membership.
- If it's wound up, members contribute nothing, or up to a maximum set in the constitution, normally a nominal £1 or £10.
- The constitution must follow a Commission model, or be as close as the circumstances allow.
- A CIO can't hold permanent endowment as its own corporate property. An endowed charity moving to a CIO uses a vesting declaration, and the CIO holds the endowment on its original trusts.
- Certain sensitive words in a CIO name need Companies House approval. "Charity", "charitable", "association", "foundation" and "trust" don't.
Charitable companies
- Usually limited by guarantee. It can't pay surpluses to members.
- Files with Companies House, and with the Commission once registered.
- Usual order: incorporate at Companies House, then apply to the Commission with the certificate of incorporation and memorandum.
- With "charity", "charities" or "charitable" in the name, Companies House needs a Statement of Non-Objection from the Commission. Apply to the Commission first and ask for the statement in the special circumstances section. Once it's issued, incorporate using it, then send the Commission the certificate and articles to finish registering. Setting up the company, section by section.
Trusts and associations
- Trustees are personally liable for what the charity does.
- Land has to be held for the charity by two or more trustees, a corporate custodian trustee or the charities' land holding service.
- Trust deeds need an independent witness to the trustees' signatures.
Changing later
An unincorporated charity becomes a CIO by registering a new CIO, checking whether the transfer needs the Commission's authorisation, then transferring its property and work. The old charity is then normally wound up. Charitable companies can convert directly. Choose the CIO model that matches: association if you already have a voting membership under a constitution, foundation if you're run by trustees under a trust deed.