Community Interest Company (CIC)

Community Interest Companies were created by the Companies (Audit, Investigations and Community Enterprise) Act 2004 and the Community Interest Company Regulations 2005 (as amended in 2014). The form was designed to fill the gap between “ordinary company” and “charity” — to give social enterprises a vehicle that could trade freely, pay staff and directors, and (in the shares model) attract investment, while keeping assets and most profits committed to the community purpose.

Adoption has been substantial. As of March 2025 there were 37,081 registered CICsin the UK, with over 7,200 new registrations in 2023–24 alone. The form is now the second-most common “mission-locked” legal vehicle in the UK after registered charities.

Most new CICs are limited by guarantee. The shares model is for cases where you genuinely intend to raise equity from mission-aligned investors who accept the dividend cap.

CIC incorporation is Companies House incorporation plus one extra document.

1. Draft the articles of association using a CIC-compliant template. The Office of the Regulator of CICs publishes a model. The articles must include the asset lock clauses; failure to use the prescribed wording is the most common drafting error.
2. Prepare the CIC36 community interest statement. A short narrative — typically 1 to 2 pages — that explains what community the CIC will serve, what specific activities it will undertake, and how those activities benefit the community. This is what the CIC Regulator actually reads. Around 4 in 10 first applications fail, almost always because the community interest statement is too vague (“helping local people”) or names benefits that don't flow to a section of the community wider than the directors and their connections.
3. Incorporate at Companies House with the IN01 form, articles and CIC36, paying the combined fee.
4. Wait for the CIC Regulator to test the community interest statement. If satisfied, the Regulator authorises Companies House to register the company.

Typical fees (April 2026):

• Companies House digital incorporation: £50 (rising to £100 on 1 February 2026)
• CIC36 community interest statement fee: £35
• Combined: £85 today, £135 from 1 February 2026

Setup time: typically 2–6 weeks. Complex or borderline community interest cases can extend further.

The asset lock is what makes a CIC a CIC. It does two things:

• Restricts transfers of assets below market value except to another asset-locked body (another CIC, a charity, or a community benefit society with a statutory asset lock), or to benefit the community the CIC was set up to serve.
• Locks the destination of net assets on dissolution. On winding up, any surplus must transfer to another asset-locked body — never to members or directors.

The asset lock is permanent and irreversible. A CIC cannot vote itself out of CIC status and back into being an ordinary commercial company. The only exits are conversion to a charity (via the CIO conversion route — see converting a CIC to a CIO) or dissolution with assets passing to another asset-locked body.

A CIC limited by shares can pay dividends, but the regulator caps them. The cap as it currently stands (after the 2014 simplification):

• Aggregate dividend cap: 35% of distributable profits in any one year.
• Unused dividend capacity can be carried forward for up to five years.
• Performance-related interest cap: 20%on loans where the interest rate depends on the CIC's performance (e.g. profit-linked loan notes).

The earlier per-share dividend cap and the 5%-above-Bank-of-England individual share rule were removed in 2014. The aggregate-profits cap is the only restriction now in force on dividend amounts.

Every CIC files an annual CIC34 community interest report with its accounts at Companies House. The fee is £15. The report must describe:

• How the CIC's activities benefited the community;
• Consultation with stakeholders the CIC affects;
• Directors' remuneration;
• Any dividends declared and any transfers of assets other than for full market value.

The CIC34 is short — usually 2 to 4 pages — but it is the key document the Regulator uses to monitor whether a CIC is still doing what its CIC36 said it would. Vague, recycled CIC34s draw scrutiny.

CICs pay corporation tax at standard rates — 19% on profits up to £50,000, 25% on profits above £250,000, with marginal relief between (the small-profits and main rates as they stand for the 2025–26 financial year).

CICs are not entitled to:

• Gift aid on donations received (only registered charities and CASCs qualify)
• The 80% mandatory business-rates relief that charities enjoy
• SDLT charity relief on premises acquisitions
• The charity-specific VAT reliefs and zero-ratings
• Charity-restricted grant funding (varies by funder; many trust and foundation funders are charity-only)

Discretionary business-rates relief from the local authority is available in principle but in practice often refused or reduced. Don't plan a CIC's premises strategy assuming rates relief.

CICs are Companies Act companies and fall fully within the Economic Crime and Corporate Transparency Act 2023:

• Identity verification via GOV.UK One Login or an Authorised Corporate Service Provider has been mandatory for new directors and persons with significant control since 18 November 2025. Existing officers must verify by 18 November 2026.
• Failure to prevent fraud(ECCTA s.199) applies to “large organisations” — turnover over £36m, balance sheet over £18m, or more than 250 staff (two of three). Almost no community CICs hit this threshold.

CIO trustees, by contrast, are not on the Companies House register at all and the ECCTA verification regime doesn't apply to them. This is one of the reasons some CICs are now actively considering conversion to CIO.

• Your social purpose is community benefit but not strictly charitable in law.
• You want to trade commercially as the main activity (café, shop, consultancy, training, energy, broadband) and would breach the charity small-trading exemption.
• You want to pay directors at market rates without seeking regulator authorisation.
• You want to raise share capital from mission-aligned investors who are content with the dividend cap.
• You expect to need light-touch governance flexibility rather than the Charity Commission's regulated-alterations regime.

• Your purposes are exclusively charitable, your funding will be mostly grants, and you want gift aid and 80% mandatory rates relief. A CIO is materially cheaper to run.
• You want to raise community shares from a wide group of local supporters. A Community Benefit Society (BenCom) is designed for this; CICs limited by shares are not.
• You only need a vehicle for a short project. A simple unincorporated association is enough and has no exit costs.
• You want flexibility to wind the company up and distribute the proceeds to members. The asset lock prevents this — permanently.

• CIC vs charity: which structure actually fits? →

  The most common comparison question, answered in one page — including the funding implications.

• 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. When it’s available, how it works, what the Charity Commission tests.

• Charitable Incorporated Organisation (CIO) explained →

  The default new-charity form — single regulator, no Companies House, no ECCTA verification on trustees.

• Companies (Audit, Investigations and Community Enterprise) Act 2004
• Community Interest Company Regulations 2005 (as amended 2014)
• Charitable Incorporated Organisations (Conversion) Regulations 2017 — for the CIC → CIO exit route
• Office of the Regulator of CICs: Information and Guidance Notes (current edition); model constitutions
• Office of the Regulator of CICs annual reports — CIC registration figures
• Economic Crime and Corporate Transparency Act 2023 — identity verification (mandatory 18 November 2025); failure to prevent fraud (s.199, in force 1 September 2025)
• Companies House fee schedule — current and 1 February 2026 revisions

General information, not legal or tax advice. For specific CIC registration, the CIC Regulator and a social-enterprise solicitor are the right starting points.