Charity and Community Interest Companies (CICs)
Charity and Community Interest Companies (CICs) are designed for organisations that aim to help others rather than making profits for private shareholders. They focus on satisfying the community and achieving social objectives.
What is a CIC?
A CIC is a type of limited company created to serve a social purpose. Unlike traditional businesses, CICs are legally bound to use their assets and profits for the benefit of the community. This is ensured through an asset lock that protects the company’s assets.
CIC or Charity – Which is Right for You?
Both CICs and charities have a shared goal of serving the public or community, but they operate differently:
Charities
Charities are usually regulated by the Charity Commission and rely on donations, gift aid, and grants
CICs
CICs, regulated by Companies House, are more flexible and can earn profits through trade while still supporting a social enterprise.
Whether you choose to set up a CIC or a charitable organisation depends on your social purpose and how you plan to operate.
CICs Limited by Guarantee
Many CICs are structured as limited by guarantee, meaning they don’t have shareholders but instead have guarantors who agree to pay a small amount if the company closes. This structure reinforces their commitment to the benefit of the community.
Key Regulations for CICs
CICs must pass a Community Interest Test to show they are genuinely focused on helping others. They must also comply with CIC regulations, ensuring they:
- Are carried on for the benefit of the community.
- Operate within the rules of the asset lock.
- Report annually to confirm they meet their social objectives.
Tax Benefits for Charities and CICs
Both charities and CICs may qualify for reduced business rates and exemptions from corporation tax if they meet the required criteria. Understanding these tax rules is essential for saving costs while staying compliant.
Why Choose TaxCare Accountants?
Setting up your CIC or charity.
Preparing reports for Companies House or the Charity Commission.
Ensuring compliance with tax and CIC regulations.
Maximising your tax relief, including gift aid.
Ready to make a difference? Contact Taxcare Accountants today for expert advice on setting up and managing your charity or CIC. Let’s work together to create a better future for your community!
