Setting up a charity in the UK: which legal structure should I choose?

Aug 25, 2023 | Charities

In the UK, charities can be structured under different legal forms depending on their size, purpose, and governance preferences.

But what is the best structure for your charity? With so many options to choose from, it can be hard to know what they mean and how they can work to your benefit.

In today’s article, we’ll highlight the common legal charity structures, their pros and cons and how they’d work for your organisation.

What structure should I choose?

Depending on what you want your charity to achieve and how you want it to run, there are different legal structures available.

Charitable Incorporated Organisation (CIO)

This is a popular legal structure for charities. A CIO is a distinct legal entity with limited liability, meaning that the trustees’ personal liability is generally limited to the assets of the CIO.

Therefore, a CIO offers a balance between the flexibility of a traditional unincorporated association and the limited liability protection of a company.

In recent years CIOs have become the go-to structure for charitable organisations, and could work well for you.

Charitable company (limited by guarantee)

A charitable company is a legal entity separate from its members (trustees) and is incorporated at Companies House.

It has the benefits of limited liability, meaning trustees’ personal assets are not at risk, but comes with additional administrative requirements associated with company registration and reporting.

So, while like most charities you’ll be exempt from paying corporation or income tax, there are some situations where you might be liable — normally related to non-charitable expenditure, like losses on non-primary purpose trading.

Unincorporated association

This is a common and simple form of charity structure and is often the route for charities that are just starting out.

An unincorporated association is not a separate legal entity from its members. Instead, trustees are personally liable for the charity’s debts and liabilities.

It relies on a constitution to outline its purposes and governance structure.


A charitable trust is established when assets are held and managed by trustees for the benefit of the charity’s beneficiaries or its specific purposes. Trusts are often used for charitable endowments or when a charity owns property.

Trusts will suit owners who value having limited liability.

Charitable trust corporation

This is a trust that has a corporate trustee, often a local authority or another corporate entity. This can provide a level of separation between the management of the trust’s assets and the charity’s activities.

Like a trust, this will suit owners who value having limited liability but also with a greater deal of rigour due to the corporate structure.

Community Interest Company (CIC)

While not exclusively a charity structure, a CIC is a company that operates for the benefit of the community rather than private profit. Some CICs may also meet the criteria for charitable status.

Charitable industrial and provident society
This is an older structure that combines features of a cooperative and a charity. It is less commonly used today due to the rise of the CIO and other structures.

Which should I choose?

Each of these legal structures has its own advantages and disadvantages in terms of liability, reporting requirements, and administrative burden. The choice of structure will depend on factors such as the size of the charity, its activities, governance preferences, and long-term goals.

It’s essential to seek legal and financial advice from an expert when deciding on the most appropriate structure for a charity.

Additionally, since regulations and guidelines can change, it’s advisable to consult with legal professionals or the UK Charity Commission for the most up-to-date information.

As accounting experts for charities, we can help you on your financial journey and help find the best structure for your organisation.

Get in touch with us today to talk about your charity.

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