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How to Create a Charity Companies

Create a charitable company in the United Kingdom

How to Set Up a Charity

Create a charitable company: if an organisation has aims and objectives that fall under at least one of the 13 purposes listed by the Charities Act 2011, and those aims are specifically for public benefit, it may be beneficial for that organisation to become a charitable company. Similarly, if a group of people wish to carry out voluntary work for a purpose which is listed by the Charities Act 2011, they may wish to set up as a charity to access some of the benefits of being registered as a charitable association.

In England and Wales charities that earn over £5,000 per year must be registered with the Charity Commission. These can then carry the words "registered charity" on letterheads and other official documentation. However, small charities which earn less than the threshold £5,000 p.a. are not required to apply with the Charity Commission.

Provided that the charitable company is established with exclusively charitable aims, and can demonstrate public benefit, it can operate as an unregistered charity until the time when it receives more than £5,000 in one year.

Rulebooks and constitutions: setting up a charitable company requires a governing document. This helps the people involved run the organisation according to agreed principles, and it also helps them stick to their objectives. Most charities will use a constitution for their governing documents, although there are other suitable types. Upon a charitable company formation, we will use a tailor made memorandum and articles of association especially for charitable companies.

Bank accounts: no matter what size, all charities need a bank account. Treasurer" or "community" bank accounts are suitable for small charities, and may be appropriate for larger, registered charities, especially in the early stages.

Tax: once a bank account has been set up, any charity can apply to HMRC for recognition as a charity for the purposes of tax. The same tax breaks available to registered charities are also available to small, unregistered ones. The tax reference number which is allocated can be used as proof of charitable status, but unregistered charities should never use the phrase "registered charity" to describe themselves.

Trustees: all charitable companies must have a group of people who agree to run the organisation according to the governing document, on a voluntary basis. Trustees have a duty of care, and should be recruited on the basis of their skills, abilities and previous experience. There are restrictions placed on who can be a trustee, for example, anyone who is disqualified from becoming a company director cannot be a charity trustee either. To set-up a charitable company in UK, you need to have at least two people who need to be appointed as a company trustees.

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There are many benefits in registering a charity company, but there is a lot of work involved too, so careful consideration must be given to everything before making the decision to go ahead with a charitable company registration.

Charitable companies limited by guarantee are required by law in the United Kingdom to register at Companies House. Coddan offers its customers UK charitable company registration packages, which help to ensure that all legal requirements have been dealt with, prior to registration. The legal costs of setting-up a charitable company limited by guarantee with Companies House is included in our price. If you need to clarify any information with regards to incorporating a charitable company & creation of a charity association, drop us an email, or give us a phone call.

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