Governance · Comparison
Charity vs CIC vs CIO
The three structures most UK founders consider, side by side. Which one fits your mission, your funding model and your tax position.
Last updated 17 May 2026·8 min read
The side-by-side table
| Charitable company (CLG) | CIC (CLG) | CIO | |
|---|---|---|---|
| Regulator(s) | Companies House + Charity Commission | Companies House + CIC Regulator | Charity Commission only |
| Setup cost | £50 (£100 from 1 Feb 2026) | £85 (£135 from 1 Feb 2026) | £0 |
| Annual filing fees | £34 confirmation statement (£50) | £34 + £15 CIC34 (£50 + £15) | £0 |
| Corporation tax | Exempt on income applied to charitable purposes | Full rates (19%–25%) | Exempt on income applied to charitable purposes |
| Gift Aid eligibility | Yes | No | Yes |
| Business rates relief | 80% mandatory + up to 20% discretionary | Discretionary only (often refused) | 80% mandatory + up to 20% discretionary |
| Trading freedom | Restricted to primary purpose + small-trading exemption | Unrestricted | Restricted (as charity) |
| Pay directors / trustees | Restricted (CC11 rules) | Yes, freely; reasonable amount | Restricted (CC11 rules) |
| Distribute profits | No | CLS only: dividends capped at 35% of distributable profits | No |
| Asset lock | Yes (charity) | Yes (CIC Regulator) | Yes (charity) |
| ECCTA verification | Yes — directors and PSCs (mandatory since Nov 2025) | Yes — directors and PSCs (mandatory since Nov 2025) | No — not on company register |
| Grant funder eligibility | Wide (charity) | Narrower (many funders charity-only) | Wide (charity) |
| Convert into / out of | Can convert directly to CIO (statutory since 2018) | Can convert to CIO if all-charitable; cannot revert to ordinary company | Cannot convert to CIC; can convert from charitable company or CIC |
Why CIO has become the default for new charities
Since the form became widely available in 2016, CIO has been the dominant choice for new UK charity registrations. The practical reasons:
- One regulator, not two. No Companies House filings, no confirmation statement, no dual annual accounts format
- £0 to set up, £0 in annual filing fees
- ECCTA identity verification doesn't apply to CIO trustees — material saving for boards with several trustees and turnover. From 18 November 2025, charitable company directors must verify; CIO trustees do not
- Same charity tax reliefs as a charitable company — gift aid, 80% rates relief, SDLT relief, primary-purpose trading exemption
- Limited liability for trustees — same protection as a charitable company
The flip side: charitable companies are still more familiar to lenders, landlords and large funders, and many long-established charities don't see enough upside in conversion to justify the work. New charities, though, almost always pick CIO.
When the CIC form makes more sense
CIC is the right call when:
- Your purposes aren't exclusively charitable in the meaning of the Charities Act 2011 s.3. Community broadband, community pub, certain local journalism, some advocacy work — all fall outside the strict charitable definition
- You want to trade commercially as the main activity — café, shop, design studio, training provider — and would breach the charity small-trading exemption (25% of income or £80,000, lower)
- You want to pay directors a market salary without Charity Commission authorisation
- You want to raise share capital from mission-aligned investors (CIC limited by shares, with 35% dividend cap)
- You want lighter governance flexibility — no regulated-alterations regime, no public-benefit test
Trade-offs: full corporation tax (no charity exemption); no gift aid; no mandatory rates relief; narrower grant funder eligibility; ECCTA identity verification applies.
When the charitable company still wins
Despite the CIO advantages, charitable companies remain preferable in some cases:
- You're a long-established charity with stable systems, an experienced board, banking and landlord relationships built around the Companies Act framework. The conversion gain may not justify the administrative work
- You operate a significant trading subsidiary that is itself a charitable company — keeping the parent in the same legal form simplifies group accounting
- You face institutional counterparties (lenders, large funders, corporate partners) who are more comfortable with Companies House registration than with the relatively newer CIO form
- You're subject to specific regulatory requirements that map more cleanly onto the Companies Act framework
For most new charities, none of these apply — and CIO is the cleaner choice.
Conversion routes between the three
- Charitable company → CIO: direct statutory conversion under the CIO Conversion Regulations 2017 (in force since 2018). Special resolution + Charity Commission registration + Companies House cancellation. Legal personality preserved
- CIC → CIO:direct statutory conversion under the same regulations, but only if all the CIC's purposes are charitable. See converting a CIC to a CIO
- CIO → CIC: not permitted by statute
- CIC → charitable company: possible but uncommon — surrender CIC status with CIC Regulator consent, then apply for charitable status
Related guides
CIC vs charity: which structure actually fits? →
The two-way version of this comparison, in more depth.
CIO explained →
Foundation vs Association, the November 2023 model, registration walk-through.
CIC explained →
CIC36, asset lock, dividend cap, CIC34 annual report.
UK community group legal structures compared →
The full seven-structure comparison on one page.
Converting a CIC to a CIO →
The statutory conversion process introduced in 2018.
Charitable trust explained →
The unincorporated trust form — common for legacy and endowed charities.
Sources
- Charities Act 2011 ss.3 (charitable purposes), Part 11A (CIOs), ss.228–233 (conversion)
- Companies (Audit, Investigations and Community Enterprise) Act 2004; Community Interest Company Regulations 2005 (as amended 2014)
- Charitable Incorporated Organisations (Conversion) Regulations 2017
- Charities Act 2022 — substantially in force; Phase 4 (s.331A) commenced 27 November 2025
- Economic Crime and Corporate Transparency Act 2023 — identity verification mandatory 18 November 2025
- Companies House fee schedule — current and 1 February 2026 revisions
- Office of the Regulator of Community Interest Companies guidance and CIC36 framework