CIO vs Charitable Company: Choosing Your UK Charity Structure (2026)

Charitable Incorporated Organisation or charitable company limited by guarantee — both incorporated, both common. Here’s how to decide for a new UK charity, with a side-by-side comparison.

Last reviewed: 10/07/2026 · Written by Ivan Siyanko, CEO, CharityIQ.

TL;DR
– CIO (Charitable Incorporated Organisation) — registered with Charity Commission only. Simpler, charity-specific.
– Charitable Company Limited by Guarantee — registered with both Charity Commission AND Companies House. Dual reporting, but more flexible for trading subsidiaries and complex structures.
– For most new small UK charities, CIO is the right default.
– Choose charitable company if you need: investor flexibility, complex group structures, employees on TUPE-protected contracts, or pre-existing brand/contracts as a non-charitable company.

Why structure matters

Your charity’s legal structure affects:
– Personal liability of trustees
– Reporting obligations
– Trading and contracting capacity
– Ability to borrow or own property
– Future restructuring options

Get it right at the start; changing later is possible but cumbersome.

The two main incorporated charity structures are CIO and charitable company limited by guarantee. (Trusts and unincorporated associations are alternatives but less common for new UK charities — and trustees personally liable in unincorporated associations.)

Side-by-side comparison

Aspect	CIO	Charitable Company
Registered with	Charity Commission only	Companies House + Charity Commission
Legal personality	Yes	Yes
Trustee liability	Limited (charity is separate legal entity)	Limited (members guarantee usually £1)
Annual returns	One — to Charity Commission	Two — to Charity Commission AND Companies House
Accounts format	SORP-compliant	SORP + Companies Act compliant
Speed to register	~3-4 months	Companies House quick (1-2 days), Commission ~3-4 months
Borrowing/charges	Limited (no charges register)	Standard (Companies House charges register)
Trading subsidiaries	Awkward	Standard
Best for	Small to medium UK charities; first-time founders	Larger or more complex charities; subsidiaries; lending
Cost	Free to register	Companies House registration ~£12; otherwise free

When to choose CIO

The CIO is the right default for most new small UK charities:

✓ Single legal entity (vs need for two registrations)
✓ One annual return (vs two)
✓ Simpler accounts (Companies Act not relevant)
✓ Free to register (no Companies House fees)
✓ Charity-specific structure designed for the sector

Choose CIO if:
– You’re starting fresh
– Annual income is likely under £500k
– You don’t need significant external borrowing
– You don’t have trading subsidiaries

The CIO has been the most common new charity structure since it was introduced in 2013.

When to choose charitable company

The charitable company structure has specific advantages:

✓ Pre-existing limited company brand — easier conversion
✓ Charges register supports lending (e.g., property purchase)
✓ Trading subsidiaries plug in naturally
✓ Companies Act flexibility for member rights, voting, etc.
✓ Some funders (rare) prefer charitable company structure

Choose charitable company if:
– You’re converting an existing limited company to charity
– You expect significant property purchase requiring secured lending
– You plan complex group structures (e.g., charitable company + trading subsidiary)
– You need member voting rights configurable in a specific way

The dual reporting (Charity Commission + Companies House) is the main cost. Many charities don’t realise it’s two annual returns — both required.

Two CIO sub-types — Foundation vs Association

Two CIO models exist:

Foundation CIO — trustees are also the only members. Single layer of governance. Simpler but less democratic.

Association CIO — separate trustees and members. Members elect trustees. More democratic, more like a typical company structure.

Most new CIOs are Foundation type. Association CIOs make sense if you want broader stakeholder governance (e.g., a community organisation where members vote on direction).

Trustees’ personal liability

Both CIOs and charitable companies provide limited liability — meaning trustees aren’t personally liable for the charity’s debts (subject to limited exceptions for serious breach of duty).

This is a significant advantage over unincorporated associations, where trustees can be personally liable. If you’re considering an unincorporated structure for a new charity, think hard about why.

From CharityIQ. CharityIQ supports both CIOs and charitable companies — the compliance dashboard tracks Charity Commission filings and (for charitable companies) flags Companies House deadlines too. See compliance →

Setting up a CIO — the practical steps

The end-to-end process for a new CIO takes 3-5 months. See our setting up a UK charity guide for the full walkthrough.

Key milestones:

Decide structure — CIO Foundation or Association
Recruit trustees — minimum 3, ideally 5+ unrelated
Draft constitution — Charity Commission has model constitutions
Open bank account — name in trust if pre-registration; transfer to charity once registered
Apply to Charity Commission — online via register a charity
Wait — typically 3-4 months
Begin trading — with charity registration number on all materials

Common mistakes

1. Picking unincorporated structure for cost reasons. Unincorporated saves nothing meaningful and creates personal liability. Don’t.

2. Charitable company without realising the dual reporting. Two annual returns. Two filing fees. Two penalty regimes if late. Plan for both.

3. Foundation CIO when you want broader governance. If members electing trustees is important, choose Association CIO from the start.

4. Not consulting a charity lawyer for complex setups. Trading subsidiaries, mergers, conversions — get advice. Cost saved by DIY can become costly later.

5. Drafting your own constitution. The Charity Commission’s model constitutions are battle-tested. Use them and amend with care.

Frequently asked questions

Q: Can we change structure later?
A: Yes — you can convert from CIO to charitable company and vice versa, but it’s bureaucratic. Pick the right structure at the start.

Q: Does structure affect grant eligibility?
A: For most major UK funders, both CIOs and charitable companies are eligible. Some specifically require registered charity status (which both have). Lloyds Bank Foundation is explicit about CIO acceptance.

Q: What about Charitable Community Benefit Society (CBS)?
A: A separate structure, regulated by the FCA rather than the Charity Commission. Used by housing associations, community shops, some food projects. Specialist advice needed.

Q: What about CIC (Community Interest Company)?
A: Not a charity. CICs are a hybrid for-profit/social enterprise structure. They have charitable purpose but aren’t tax-exempt as charities. Consider if your work mixes commercial and charitable elements.

Q: How much does it cost to set up?
A: CIO: free (Charity Commission charges nothing). Charitable company: ~£12 Companies House fee, plus ~£100-£500 legal fees if you want professional advice on the constitution.

What to do this week

If you’re considering setting up a charity:
1. Read Charity Commission’s CC21a guidance on CIOs
2. Review the model constitutions for both CIO and charitable company
3. Speak to a charity lawyer for 1 hour — most offer free initial consultations to charity founders
4. Draft a one-page brief of what your charity will do, why, and who’s involved

Get charity admin right from day one. Start a free 14-day CharityIQ trial. Start free trial →

Written by Ivan Siyanko, founder of CharityIQ.

Sources:
– Charity Commission — Setting up a charity (CC21a, CC21b)
– Charity Commission — Charitable Incorporated Organisations
– Charity Commission — Setting up a charity: model governing documents
– NCVO — Choose a legal structure
– Companies House — Limited by guarantee