The UK Rules
Setting Up a Charity

Setting Up a Charitable Foundation

Even though becoming a charity has its advantages, it may not be right for your organisation. This guide will help you to determine whether it is the best option.

We set out the key factors to consider when setting up a new charity in England or Wales. Read on to find out if your organisation will meet the charity test and where to get expert help.

Set Up a Charity in UK | Table of Contents

As a general rule, starting up a charitable foundation involves six steps:

Note: The rules for becoming a charity differ in Scotland (review the Office of the Scottish Charity Regulator) and in Northern Ireland (according to The Charity Commission for Northern Ireland).

Charities and Tax Relief

Having set up a charity, you may qualify to get certain tax reliefs. But, you would need to get recognition for tax purposes by HM Revenue and Customs (HMRC) to benefit from the incentives.

1. Finding New Trustees (CC30)

In most cases, the first step will be to find trustees for your charity (usually 3 as a minimum). The Charity Commission can advise charities on how to recruit trustees, select the right ones for appointment, and then induct them.

Note: The guidance notes 'finding new trustees CC30' answers many of most common questions. It also sets out a framework for the trustee recruitment process.


2. Charitable Purposes for Public Benefit

The 'charitable purposes' of a charity must help the public in some way (e.g. for public benefit) and may include things that contribute to:

  • Amateur sport
  • Animal welfare
  • Citizenship or community development
  • Education
  • Health
  • Human rights
  • Relieving poverty
  • Religion (including religious or racial harmony)
  • Saving lives
  • The arts
  • The efficiency of the armed forces, police, fire, or ambulance services
  • The protection of the environment

Note: The Charity Commission produces a step by step guide that explains how to write charitable purposes with further information about public benefit rules for charities and suitable aims.

Important InformationUnited Kingdom law does not allow the setting up of a charity to help only 'one' specific person!

3. Naming Your Charity

The name of your charity must not:

  • Be similar to the name of any existing charity (unless you are able to prove that you need to use it).
  • Be misleading (e.g. suggests that your charity does something that it does not).
  • Use acronyms or offensive words.
  • Use any words that you do not have permission to use (e.g. a trade mark).

You can search the charity register to check names already registered as charities in the United Kingdom. But, it will not disclose information on any unregistered charities.

Additional Names You Can Use:

  • Abbreviations (e.g. NSPCC is the National Society for the Prevention of Cruelty to Children).
  • Alternative names (e.g. Comic Relief is a working name for Charity Projects).

You would need to list any alternative or working names used by your charity when you apply for the registration.

Using Non-English Names

You can use non-English words in a charity's name. But, you would need to include a translation of any used when you register the name.

Using the Word 'Charity' in the Name

The rules allow the use of 'charity', 'charities', or 'charitable' when naming a charity. But, the Charity Commission must approve it if you register it as a company name with Companies House.


4. Charity Structures UK

There are four common types of charity structures. It is important to choose a structure for your charity that matches the aims because it will affect:

  • Who will be running the charity and how they run it.
  • What the charity is allowed to do (e.g. employ people or own property).

Charitable Company

Charitable companies must be limited by guarantees when you register (not shares). So, you would need to select 'private company limited by guarantee' on the form. The fee for registration is £40.

Note: The trustees would have limited liability (or none) for debts or liabilities of a charitable company.

Application to Register a Company

Use Form IN01 to register a charitable company with Companies House. In some cases, you may also need to use continuation pages if you need extra space to write. Use form IN01c if you need the Welsh version.

Charitable Incorporated Organisation (CIO)

You would create this kind of incorporated structure designed for charities by registering it with the Charity Commission (not Companies House).

Note: The trustees would have limited liability (or none) for debts or liabilities of a charitable incorporated organisation.

Charitable Trust

This type of charity structure creates a way for the trustees (a group of people) to manage assets. The assets can be investments, money, land, or buildings.

Unincorporated Charitable Association

The rules do not allow unincorporated charitable associations to employ staff or to own premises. But, it is an uncomplicated way for a group of volunteers to set up and run a charity for a common purpose


5. Governing Document

You can consider the 'governing document' as a rulebook for the charity. The main purpose of a governing document is to explain how the charity will be run. It allows the trustees and other interested parties to determine:

  • The purpose of the charitable organisation
  • Who runs it and how they are running it
  • The way that trustees are appointed
  • The rules on expenses and payments for trustees
  • How to close down the charity

The structure of your charity will determine the type of governing document that you need. Guidance notes CC22b explain how to set out its purposes and how to write rules in the governing document (including templates).

Trustees of the charity must meet together to sign the governing document. Setting up a charitable trust means you would also need an independent witness.

Note: You can use your own templates to create your own governing document. But, doing so can delay the registration process.


6. Registering a Charity

You will need to apply to register a charity if yours:

  • Has an income of £5,000 per year (or more) or structured as a charitable incorporated organisation.
  • Is based in England or Wales (the rules differ in Scotland and in Northern Ireland.

Supporting Documentation

During the application process the Charity Commission will ask about the charitable purposes of your charity, and:

  • How you will run the charity for public benefit.
  • Evidence showing an annual income above £5,000 (unless yours is a CIO).

Other information and documents that you will need to supply include your charity's name, and:

  • Bank or building society details
  • Most recent accounts
  • Contact details (must include a postal address)
  • Trustee names, dates of birth, and contact details
  • A copy of the governing document (in PDF format)

Providing Proof of Income

Proof of income is not always needed, but when it is you can use:

  • The latest 'published' annual accounts (in PDF format). An independent examiner or auditor must have approved them as proof of income.
  • A scanned image of a recent bank statement or formal offer of funding from a recognised funding body.

Note: The laws and regulations of charities vary. Even so, the funds of charitable organisations must not profit entities or any individual persons.


Setting Up a Charity in United Kingdom

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