Understanding charity status and registration

Use this page to understand what charity status is and if you need to register as a charity.

Charity is a specific status for an organisation. Charity status is not a legal structure, although being a charity will likely inform your legal structure.

According to the Charities Act 2011, to have charity status, an organisation must meet the following criteria.

• The purpose of your organisation must be exclusively charitable. These are sometimes called your organisation’s charitable objectives. A charity’s ‘purpose’ is what it’s set up to achieve. ‘Charitable’ purposes fall within one or more of the 13 descriptions of purposes listed in the Charities Act.
• The charity’s trustees must carry out its charity’s purposes for public benefit. This is called ‘the public benefit requirement'.
  • The ‘public aspect’ of this requirement means your charity’s purpose must:
    • benefit the public in general or a sufficient section of the public (‘a sufficient section of the public’ varies from purpose to purpose)
    • not give rise to more than incidental benefit. Personal benefit is ‘incidental’ where it is a necessary result or by-product of the carrying out the purpose.
  • The ‘benefit aspect’ of this requirement means that:
    • a purpose must be beneficial in a way that is identifiable and can be proved by evidence where necessary and not based on personal views
    • any detriment or harm that results from the purpose must not outweigh the benefit. This must also be based on evidence not on personal views.
• Read the Charity Commission’s guidance on ‘What Makes a Charity’
• Find information about the 13 descriptions of a charitable purpose and the public benefit requirement on the Charity Commission’s website.

The Charity Commission regulates registered charities in England and Wales. Even if you have charity status, not all charities are required to register with the Charity Commission.

Charities required to register with the Charity Commission

Charities have to register with the Charity Commission if:

• the charity has, or expects to have, an annual income of over £5,000
• the charity is not an exempt or excepted charity. These organisations don’t have to follow all or some of the Charity Commission’s rules.
  • Find out if your charity is exempt on the Charity Commission’s website.
  • Find out if your charity is excepted on the Charity Commission’s website.

Find information about how to register a charity on the Charity Commission website.

Charities not required to register with the Charity Commission

Charities that have an annual income of less than £5,000 are not required to register with the Charity Commission and cannot voluntarily do so unless they have the legal structure of a Charitable Incorporated Organisation (CIO), meaning they're automatically registered. They must still follow charity law. The Charity Commission can investigate even though these organisations are not required to register.

• Find out more about different legal structures for charities on our page on choosing your legal structure.

If your organisation has charity status, this means:

• a board of trustees controls it and the assets are held in trust by them. Assets are an item of property owned by an organisation, seen as having value and can be used to meet debts, commitments, or legacies.
• It will need to follow charity law as well as regulatory restrictions and requirements.
• It should be able to receive tax relief.

The board of trustees

Trustees are responsible in law for making sure that charities are run to deliver their charitable purposes for the public benefit. A trustee is a voluntary role as part of a charity. You will need at least 3 unrelated trustees to register with the Charity Commission. This is set out in the charity’s governing document or constitution.

• Find out about the roles and responsibilities of trustees.
• To find out more about the role of a charity trustee, read the essential trustee: what you need to know, what you need to do (CC3) on the Charity Commission’s website.
• Take a look at the Charity Set Up Tool’s simple guide to recruiting your trustees
• Find further information on governing documents.

Regulatory restrictions and requirements

All charities (registered or unregistered) must follow Charity Commission rules and guidance. If a charity is also a registered company with Companies House, it will need to follow the Companies Act (2006). Rules and guidance may differ depending on the size of your charity.

Charities may be restricted in the work that can be carried out or funded. Certain political activities and types of trading are subject to restrictions. For example, charities cannot engage in trading that simply aims to generate funds for the charity and is not related to its charitable objectives.

• Find out more about how charities may lawfully trade in the Charity Commission’s guidance.

As a charity you are required to do the following.

• Follow your governing document: You need to carry out work within your charity’s constitution or governing document. You should read it to make sure you understand what is expected.
• Prepare annual accounts: A financial report presented by the trustees of a charity to its members (and where required the Charity Commission) each year. This document will follow the Statement of Recommended Practice for charities. You must prepare annual accounts and make them available to the public on request.
• Produce a trustees’ annual report: You must produce a trustees’ annual report. This is giving an account of the charity’s performance. The content of the report will change depending on the size of your charity.
• Prepare a charity annual return: You must submit an annual return within 10 months of the end of your financial year.
• Publicity: Charities with an income over £10,000 must publish their registration number and name on online publications and printed materials.

Find further information on:

• what a charity's governing document should include
• how to prepare the right annual accounts
• what to include in your trustees' annual report
• how to prepare your charity’s annual return
• how to register a charity on the Charity Commission website
• the legal requirements for charities and most voluntary organisations, by reading our legal compliance checklist.

Receiving tax relief

Whatever their size, charities can register with HMRC for tax purposes. Charities don’t pay tax on most of their income and gains if they use it for charitable purposes.

GOV.UK has information about tax reliefs and when charities do pay tax.

This is a complex area and can be hard to understand. This information is not a substitute for legal advice.

Guidance

• Find out more about registering in the Charity Commission's guidance on how to register a charity.
• Take a look at our Charity Set Up Tool for a simple guide on the steps to take when setting up and registering a charity
• You can watch LawWorks' free video on Charity Commission registration.

Advice

• Interface Legal Advisory Service can offer legal advice on setting up charities, community interest companies and other voluntary structures. Advice is offered at a reasonable cost, suitable for those with a limited budget.
• LawWorks is a charity which connects solicitors with people and organisations in need, to help provide access to justice through free legal advice. It’s currently piloting a service which provides legal advice in relation to setting up and registering a charity. The pilot currently only assists up to two applicants per month.
• You can listen to a recording of our ‘setting up a charity’ webinar, we hosted in partnership with Withers LLP.