What is the difference between a community interest company and a charity?

What are the differences between community interest companies and charities? Charities must be established only for charitable purposes. Community interest companies (CICs) can be established for any lawful purpose, as long as their activities are carried on for the benefit of the community.

Is a community interest company a charity?

Legal forms. CICs must be limited companies of one form or another. A CIC cannot be a charity, an IPS or an unincorporated organization. … CICs are more lightly regulated than charities but do not have the benefit of charitable status, even if their objects are entirely charitable.

What is the difference between a CIC and a registered charity?

The biggest difference

The largest difference between a CIC and charity is the source of funding. A CIC will get most of its income from trade, selling something then reorienting the money into the social enterprise. A charity, on the other hand, will be almost entirely reliant on donations and grants.

Should I set up a CIC or a charity?

Charities can claim relief on most income and gain, and on profits from some activities. They can also claim back tax previously paid on any income they receive – such as the income tax paid on donations. By contrast, CICs don’t get any tax breaks, even if their objects are entirely charitable.

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Can a CIC convert to a charity?

From 1 September 2018 a CIC has been able to convert into a charitable incorporated organisation (CIO). … Unlike a charitable company, CIOs only need register with the Charity Commission. They do not need to and, in fact, cannot apply to be registered with Companies House.

What is the difference between a CIC and a CIO?

Unlike a CIC, a CIO (or Charitable Incorporated Organisation) is a new legal structure introduced for non-profit organisations and charities. With a CIC, you need to apply to Companies House when registering. However, with a CIO, you only need to register with the Charity Commission.

Can a CIC pay its directors?

A major advantage of CICs is that their directors can be paid a salary, which means that the founders of the CIC can retain strategic control of the enterprise by sitting on the board as paid directors.

What is the benefit of being a CIC?

It has legal protection from demutualization and windfall profits being paid to directors and members. It has timely checks by the community interest company legislation. A regulation to ensure the community interest company maintains its asset lock and provides benefit to the community it was set up to serve.

How many directors does a CIC need?

If your CIC is limited by shares, you can only have one director and shareholder. A CIC that is limited by guarantee should have at least two directors or trustees. Depending on the bank or funding body you’re working with, they may require three.

Does a community interest company pay tax?

Does a community interest company (CIC) Pay Tax? A community interest company (Or CIC) is liable to Corporation tax as a company. This applies to all it’s Trading profits, Investment Income and any gains. It’s an asset locked body that must ensure any profits/assets are used for the benefit of the community.

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