What is inside
- Charitable status or CIC: what the tax reliefs are worth and what they cost you in control
- The three UK charity jurisdictions and the structures each one offers
- Foundation CIO, Association CIO or charitable company limited by guarantee
- The small-trading exemption limits, with a worked example
- What a trading subsidiary does, and the hidden costs of running one
- A recommendation matrix, ten questions for your next board meeting, and wording for the minute
Who it is for
Trustees, chief executives and finance leads of UK charities and social enterprises that are setting up, restructuring or starting to trade.
What you get
A 14-page PDF you can read on screen or print, delivered as an instant download after purchase. Every finding is labelled as evidence, our interpretation or a decision for your board, so you can see what is fact and what is judgement.
Questions this guide answers
Should we be a charity or a Community Interest Company?
If your purposes are charitable and the tax reliefs would be material, be a charity. A CIC gets no Gift Aid and no mandatory business rates relief, and pays corporation tax. Choose a CIC where the founder must be paid and stay in control, or the activity is mostly commercial, and make that trade-off knowingly.
What is the difference between a CIO and a charitable company?
A Charitable Incorporated Organisation is regulated by the charity regulator alone, has limited liability and a constitution written for charities. A charitable company limited by guarantee is also registered at Companies House. Larger, contract-heavy or borrowing charities, and those working in more than one UK nation, often prefer the company form.
How much can a charity trade before it needs a subsidiary?
Trading that advances your purposes, and trading that is ancillary to them, can sit inside the charity. For other trading, HMRC's small-trading exemption allows up to £8,000 of turnover if income is under £32,000, 25% of income between £32,000 and £320,000, and £80,000 above that. The limits apply to turnover, not profit.
What does a trading subsidiary actually do?
It ring-fences commercial risk so losses stay out of the charity, allows substantial non-primary trading, and passes its taxable profits to the charity under Gift Aid to cut corporation tax. It also gives commercial decisions their own board and accounts. It is not a charity and gets none of the charity reliefs.
Can a charity change its structure later?
Yes, but at a cost. If UK-wide work is a real plan within five years, build for it now. If it is only a hope, do not shape the structure around it.
The guide gives the full reasoning, the numbers and the worksheets behind each of these answers.
