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This section contains:

Charity Commissions
Charitable status in England and Wales
  Charitable purposes
  Independent schools and the Charity Commission
  Small charities
  Legal form of a charity

  What's new
Charitable status in Northern Ireland
Charitable status in Scotland
Charitable Incorporated Organisations
Regulation of fund raising by charities
Community Interest Companies
Charities and tax


An organisation which carries on activities exclusively for purposes recognised by the law as charitable is commonly known as a “charity”. The legal concept of a charity has existed for hundreds of years in the United Kingdom and its separate nations.

The law on charities in Northern Ireland and Scotland is distinct from albeit similar to that of England and Wales. The Northern Ireland legislation is contained in the Charities Act (NI) 2008 (partially in force). In Scotland the legislation is contained in the Charities and Trustee Investment (Scotland) Act 2005

The tax aspects of charitable status are governed by UK law as a whole (see below).

Charity Commissions

The Charity Commission registers and regulates charities in England and Wales. See the Charity Commission

There are separate bodies for Scotland and Northern Ireland:

Charity Commission for Scotland

Charity Commission for Northern Ireland

Charitable status in England and Wales

The number of applications for registration as a charity has been rising for three years, and in 2016-17 was up 2% on the previous year. At 31 March 2017, there were 167,063 charities (and 16,455 subsidiaries) on the register. During the year, the Charity Commissione regulated £74.7 billion of charity income, almost £4 billion more than the previous year, and over £71 billion of charity spend.

The majority are unincorporated associations or trusts. An increasing number of charities have however adopted a corporate structure in order to have the benefit of status as a legal entity and limited liability of members. The disadvantage of corporate structure is that the charity will be supervised by both the Charity Commission and either Companies House (in the case of charities registered as limited companies) or by the Financial Services Authority (in the case of charities registered as community benefit societies).

* Source: Charity Commission


In England and Wales the law relating to the legal concept of charity has developed through court decisions and Acts of Parliament since the time of Elizabeth I, when Parliament passed the Charitable Uses Act 1601. The most recent legislation in force is the Charities Act 2011 which provides that a charity is an institution:

* which is established for charitable purposes only; and

* the purposes are for the 'public benefit'.

Charitable purposes

A charitable purpose is a purpose which is listed in the Charities Act 2011 and is and
is for the public benefit. The Charities Act  lists the purposes which qualify for charitable status:

* the prevention or relief of poverty

* the advancement of education

* the advancement of religion

* the advancement of health or the saving of lives

* the advancement of citizenship or community development

* the advancement of the arts, culture, heritage or science

* the advancement of amateur sport

* the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity

* the advancement of environmental protection or improvement

* the relief of those in need by reason of youth, age, ill-health, disability, financial hardship or other disadvantage

* the advancement of animal welfare

* the promotion of the efficiency of the armed forces of the Crown, or of the efficiency of the police, fire and rescue services or ambulance services

* any other purposes recognised as charitable under existing charity law including facilities for recreation or other leisure-time occupation, if the facilities are provided in the interests of social welfare

* any purposes that may reasonably be regarded as analogous to, or within the spirit of, a purpose falling within the above heads; and

* any purposes that may reasonably be regarded as analogous to, or within the spirit of, a purpose which has been recognised under the previous head

Public benefit

A recent and thorough judicial review of the case law on public benefitis to be found in the decision of the Upper Tribunal (Tax and Chancery Chamber) in The Independent Schools Council v The Charity Commission for England and Wales (see below).

Independent Schools and The Charity Commission

As part of its statutory functions, the Charity Commission publishes guidance on charity matters including ‘Charities and Public Benefit’.

In 2011, the Independent Schools Council (‘ISC’) took issue with sections in the guidance in relation to the public benefit requirement for independent schools, in that the guidance did not reflect the true state of charity law on public benefit and charities which charge fees. The challenge took the form of an application for judicial review by the Upper Tribunal (Tax and Chancery Chamber).

The result of the application was that the Upper Tribunal upheld the principal contentions of the ISC and ordered that Charity Commission to remove the offending sections from its guidance. Afteer putting out replacement guidance to consultation in 2012, the Commission adopted revised guidance.

The Upper Tribunal also heard at the same time a Reference by the Attorney-General which raised a series of detailed hypothetical questions on the application  of charity law to a charitable educational institution which performs its objects solely by providing certain services for which it charges fees which cannot be afforded by a significant proportion of the population.

The Upper Tribunal is a Superior Court of Record having status equivalent to the High Court. Its judges include High Court judges and other specialist judiciary. The decision of the tribunal in The Independent Schools Council v The Charity Commission for England and Wales is therefore a recent and authoritative review of the law in the area of charity law and public benefit, and particularly on its application to fee-charging independent schools, containing as it does a review of the case law on public benefit and answers to the Attorney-General’s questions.

Small charities

Charities with an annual income of up to £5,000 need not register with the Charity Commission. Such charities may register directly with HM Revenue & Customs in order to establish their charitable status and gain an HMRC charity number. See the HMRC Charities Detailed Guidance Notes – Chapter 2

Legal form of a charity

A charity is not a separate form of legal entity. It may take a number of different legal forms including:

* Unincorporated association
* Trust
* Company limited by guarantee (see limited companies)
* Community Benefit Society (see Social enterprises)
* Charitable incorporated organisation (see below).

Legaleze comment: an unincorporated association and/or trust have the disadvantage of not being a separate <legal entity> or having <limited liability>.
If it takes the form of a company limited by guarantee, the charity will have the benefit of separate legal personality and limited liability. “Limited by guarantee” means that instead of investing in shares in the company, each member promises to pay a certain amount (e.g. £1.00) towards the debts of the company if ever required.
The disadvantage of the limited by guarantee form for a charity is that it will be subject both to the filing requirements of Companies House as with all limited companies and those of the Charity Commission.
Companies limited by guarantee are dealt with in more detail on our page relating to Private limited company.

What's new items relating to Charity regulation in England and Wales  [see What's new page or archive for full item]:

19/06/2020: Charity Commission issues warning to the Islamic Centre of England

The Charity Commission has issued an Official Warning to the Islamic Centre of England Ltd (registered charity 1058998) as it found the trustees failed to discharge their legal duties towards the charity, which has resulted in misconduct and/or mismanagement..

According to the Charity Commission, on 3 January 2020 the trustees allowed a candlelit vigil to be held at the charity’s West London premises in response to the death of the Iranian Major General Qasem Soleimani. The event risked associating the charity with a speaker who may have committed an offence under the Terrorism Acts, as the speaker was filmed during the event appearing to praise and call for support for Soleimani. The trustees failed to intervene or provide a counter narrative.

The Charity Commission pointed out that General Soleimani has been subject to financial sanctions by HM Treasury for terrorism and/or terrorist financing since 17 October 2011 following a designation under the Terrorist Asset Freezing Etc Act 2010. The Commission stated that the trustees clearly failed to take account of regulatory advice and guidance issued by the Commission in January 2015 regarding the hosting of public events and the selection of speakers. They also put the charity’s reputation at risk.

The Official Warning to the charity was made under section 75A of the Charities Act 2011  and it requires the trustees to take specific steps to review content on the charity’s website and ensure appropriate consideration is given and risk assessments conducted for any future events held at the charity’s premises.

The Commission has an ongoing regulatory case into the Islamic Centre of England Ltd.

Comment: the charity is closely connected to the Iranian State. It was founded in 1995 under the supervision of Ayatollah Mohsen Araki, one of the first Director/Trustees who is a prominent Iranian scholar and cleric. The principal objects of the charity are the advancement of the religion of Islam in accordance with the principles and tenets of the Shi’ah Ithna Ashari Muslim faith. At least one of the charity’s trustees must be a representative of the Supreme Spiritual Leadership of the Islamic Republic of Iran.

In 1996 the charity acquired and lavishly refurbished the old Maida Vale Picture Palace building, funded by a £1.2 million donation by the charity’s then directors.

Additional sources [accessed 20/06/2020]:


09/01/2018: Charity trustees removed after failing to account for £92,110

Source: The Charity Commission

The Charity Commission opened an investigation in 2016 into Peacetrail whose objects were to “advance the Islamic faith and relieve poverty by supporting women and children who face financial hardship in the UK and abroad”. The Commission found that the charity’s Chief Executive had authorised his own salary payments to the charity’s CEO, and that there had been unmanaged conflicts of interest and a lack of due diligence or monitoring of those with whom the charity had worked. There was also a failure to account for at least £92,110, nearly 50% of the charity’s total expenditure

The Charity Commission has in consequence removed two trustees and disqualified another person. The charity has been dissolved in accordance with the Charitable Incorporated Organisations (Insolvency and Dissolution) Regulations 2012, SI 2012/3013.

05/12/2013: Charity Commission responds to NAO report

The Charity Commission has accepted the recommendations of the National Audit Office (NAO) in its report ‘The Regulatory Effectiveness of the Charity Commission and The Cup Trust’ published on 4 December 2013.

Charitable status in Northern Ireland

The list of 'descriptions of purposes' in the Charities Act (NI) 2008 sets out broad areas of potentially charitable activity. These descriptions are not objects in their own right.
The Charity Commission for Northern Ireland is in the course of drawing up a register of charities.

Public benefit and registration guidance consultation

The Charity Commission for Northern Ireland recently published guidance on Public benefit and on Registering as a charity in Northern Ireland.

What's new relating to charity regulation in Northern Ireland [see What's new page or archive for full item]:

30/05/2013: Charities (2008 Act) (Commencement No. 4) Order (Northern Ireland) 2013
The Charities (2008 Act) (Commencement No. 4) Order (Northern Ireland) 2013 is made under section 185(1) of the Charities Act (Northern Ireland) 2008(1). This Order brings into operation on 24th June 2013 a number of provisions of the Act mainly relating to the establishment and maintenance of a register of charities.

Charitable status in Scotland

In May 2001 the Scottish Charity Law Review Commission published its report (the McFadden Report) making 114 recommendations for the reform of charity law and regulation in Scotland. [The report appears to have assumed that the law of charities in Scotalnd was the same as in England and Wales]. Following a period of consultation and policy development, the Scottish Parliament enacted tThe Charities and Trustee Investment (Scotland) Act 2005 (‘the 2005 Act’), which came into force in April 2006.

The Act introduced a statutory definition of a charity in Scotland as ‘a body
entered in the register’ (s.106 of the 2005 Act). Whether an organisation is a charity under the Act therefore depends on whether it has been entered in the Scottish Charity Register.

Further information: see the Office of the Scottish Regulator's website.

What's new item relating to charity regulation in Scotland [for full item see What's new page or archive]:

11/01/2013: Three Scottish independent schools fail charity test
The Scottish Charity Regulator has announced its decisions on 13 of the 40 fee-charging schools whose charitable status it is currently reviewing as a 'priority group' for assessment by the Summer of 2014.
The Regulator has assessed the 13 schools under the charity test which is defined in the Charities and Trustee Investment (Scotland) Act 2005. Ten have met the test and have been confirmed as keeping their charitable status. The remaining three have failed to meet the test and have therefore been issued with Directions instructing them to widen access to the benefit they provide.
The three schools - Fettes College and St George's School for Girls in Edinburgh, and St Columba's School in Kilmacolm, Inverclyde - have been given 18 months to comply. The Regulator's view in each case was that insufficient measures had been taken to provide assistance in respect of high school fees, or to otherwise widen the access to the benefit they provided.

Charitable Incorporated Organisation (“CIO”)

England and Wales

The new status of the charitable incorporated organisation (CIO) is designed to offer a practical alternative for charities seeking the protection and practicality of incorporation without having to meet the dual registration and reporting requirements of the Charity Commission and either Companies House or the FSA.

The number of registration applications for Charitable Incorporated Organisations has been increasing; for 2016-17 it was up 9% to 4891 (2015-16: 4,509).

The subordinate legislation to enable the creation of Charitable Incorporated Organisations in England and Wales is the Charities Act 2011 (Commencement No 1) Order 2012 (SI 2012/3011) which took effect on 2 January 2013 and was made under the Charities Act 2011. The Charitable Incorporated Organisations (General) Regulations 2012 (SI 2012/3012) also came into force on 2 January 2013 along with other technical and consequential changes to the legislation including the Charitable Incorporated Organisations (Consequential Amendments) Order 2012 (SI 2012/3014) and the Charitable Incorporated Organisations (Insolvency and Dissolution) Regulations 2012 (SI 2012/3013).

In November 2017, the Charity Commission announced a phased timetable allowing charitable companies to convert to charitable incorporated organisations (CIOs) following legislative changes in Parliament on 23 November 2017.

The new legislation also means that all charitable incorporated organisations (CIOs) will be listed on the Business names index, held by Companies House.

The much anticipated Secondary Legislation under the Charities Act 2011 contains 3 distinct elements:

the Charitable Incorporated Organisations (Conversion) Regulations
the Charitable Incorporated Organisations (Consequential Amendments) Order
the Index of Company Names (Listed Bodies) (England and Wales) Order

The Charity Commission (the Commission) is now preparing a programme of work to support these changes.


Northern Ireland

The CIO legal status is planned for Northern Ireland but the necessary legislation has not been implemented as at the date of writing..

Further information is available from the Charity Commission for Northern Ireland.


In Scotland, the equivalent legal form is the Scottish Charitable Incorporated Organisation (SCIO) which has been available from 1 April 2011 to unincorporated associations applying for charitable status for a new organisation and since 1 January 2012 for existing charitable companies and charitable industrial and provident societies applying to convert to SCIO.

Further information is available from the Office of the Scottish Charity Regulator.

Fund raising by charities

There is legislation regulating fund raising by charities in the street and public places, and the making of collections from house to house (which includes not only residential houses but also shops, public houses and places of business).

Licences are granted by the local authority (by the police in the Metropolitan Police area).

Legislation also regulates agreements with charities made by professional fund-raisers and commercial participants. It also regulates statements made by perons which make claims that contributions are being sought or made for charitable purposes.

Reform: this area of the law is due to be reformed but details are not available as at the date of this page.

Further information: Charity fund raising

Community Interest Companies

Community Interest Companies (“CICs”) are a form of social enterprise suitable for community benefit organisations which may or may not make a profit. They cannot be charities. A charity may, however, own a CIC and the CIC would be permitted to pass assets to the charity. This for example enables a CIC to run a charity shop and pass all the profits to the charity that owns it.

For further information on CICs, see our page on Social enterprises.

Comparison between charities and CICs

Charities must be established exclusively for charitable purposes: CICs can be established for any lawful purpose, as long as their activities are carried on for the benefit of the community

Charities have certain tax advantages that CICs do not have. In return for those advantages, charities are subject to more onerous regulation than CICs

The CIC legal form was specifically designed to provide a purpose-built legal framework and a "brand" identity for social enterprises that want to adopt the limited company form.

CICs will be free to operate more commercially than charities (e.g. CICs limited by shares can pay dividends to individual shareholders, subject to a cap), but stakeholders in CICs will still have the assurance of community benefit provided by the asset lock and transparency about their activities ability through the community interest report.

Charities and tax

If an organisation is recognised as a charity for UK tax purposes, it may qualify for a number of tax exemptions and reliefs on income and gains, and on profits for some activities. . The organisation may qualify for certain tax and VAT reliefs and exemptions e.g:

* Income Tax and Corporation Tax exemptions and reliefs for charities
* Capital Gains Tax relief for charities
* Charity business rates relief
* Charity Stamp Duty Land Tax relief

In order to claim these, the organisation must apply on form ChA1 to HM Revenue & Customs (HMRC) Charities for recognition as a charity for tax purposes [Finance Act 2010 Schedule 6 paragraph 1]..

A charitable organisation is not totally exempt from  tax. It it receives taxable (non-exempt) income or gains, it must inform HMRC and complete a tax return - either Self Assessment or Company Tax Return depending on whether it is set up as a charitable trust or company.

If the charitable organisation has business activities,  the VAT rules will apply as with any other business.

Gift Aid

An important tax rule for charities recognised by HMRC is the Gift Aid scheme. Gift Aid allows a charity to reclaim tax from HMRC on the 'gross' equivalent of donations, i.e. their value before tax was deducted at the basic rate, currently 20 per cent. The amount of tax which may be reclaimed is calculated by dividing the amount donated by four; therefore for every £1 donated, the charity may claim an extra 25 pence.

Tax relief for donors: if a donor is a higher or additional rate taxpayer, he may also benefit from tax relief as he may claim relief equal to the difference between the higher rate of tax at 40 per cent or 50 per cent and the basic rate of tax at 20 per cent on the total value of the donation. For example, in the case of a donation of £1, the 'grossed up' donation would be £1.25 and a donor liable at the 40 per cent tax rate could claim relief of 25 pence (20 per cent of £1.25).

Small Charitable Donations Act

This Act introduced the Gift Aid Small Donations Scheme which was announced in the 2011 Budget. The purpose of the scheme is to enable charities and Community Amateur Sports Clubs ('CASCs') to claim a Gift Aid-style payment on small cash donations up to £20 where it is often difficult to obtain a Gift Aid declaration. In general, eligible charities and CASCs will be able to claim top-up payments on up to £8,000 small donations each year.

Further information

Further information: see the HMRC  tax guidance for charities.

[Page updated: 21/06/2020


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