Across the UK, people often come together for a common purpose, typically to support vulnerable people or their community in some way. If this group becomes more formal, then there’s often a question as to whether the unity should become a charity or a Community Interest Company (CIC).
A CIC – a hybrid between a charity a non-profit-making company – is a limited company that operates to provide a benefit to the community it serves. Examples of a CIC could be a direct welfare service to vulnerable people, or an activity that generates profits which are used to support a specific purpose such as a running a café, where all profits generated are used to benefit the community.
A CIC operates in the same way as any other company, with many of the characteristics of a limited company, such as a separate legal identity; the ability to enter into contracts and own assets in its own name; and flexibility in borrowing and fund raising. The separate legal identity means that a CIC will continue to exist despite changes in ownership or management. The directors can be paid or unpaid and have the same rights and duties as any other directors.
There are certain activities that the CIC legislation states are not eligible for CIC status and these activities include a political party or a political campaigning organisation.
The option of becoming a charity, rather than a CIC, comes with more compliance and regulation, as well as the requirement for trustees and AGMs etc. However, there are also benefits. If you’re looking at the pros and cons of both from a finance and tax perspective, do get in touch with us at Lewis & Co.
The 2024/25 Annual Report from the Government’s Regulator of Community Interest Companies (CICs) stated that the number of CICs on the register rose, with a record 8,376 new CICs being incorporated during that year, a 12% rise from the previous financial year.
As Louise Smyth, the then Regulator of Community Interest Community explained in the report: “Since the inception of the Community Interest Company model in 2005, CICs have continued to grow in number and in influence. As at March 2025, there are now over 37,000 registered CICs across the UK, demonstrating the strength of social enterprise as a force for good.”
A CIC can only be registered with the consent of the Community Interest Companies Regulator; the application must comply with CIC legislation as well as the usual rules for registration of a company. Currently, it costs £115 to register a CIC online/via software (£139 paper) and £45 for the conversion of a limited company to a CIC.
Each year, a CIC must submit a return stating what its activities have been and that these have been of community benefit; the annual CIC Reporting Fee is £15. We can help our clients with that reporting element for Companies House, while also supporting them as they plan ahead.
Here at Lewis & Co, we have supported a number of CICs as clients over the years, including food hubs, community shops and cafes, and community exercise groups. Although they are basically treated in a similar way to limited companies, as regards to tax, our support also includes tax planning and management to make sure they aren’t paying more tax than they need to.
For more information, do get in touch on 01892 513515 or email: info@lewisandco.biz