In short: To set up a charity you need charitable purposes that benefit the public, usually at least three trustees, a suitable legal structure and a governing document. In Scotland you apply to OSCR; in England and Wales you register with the Charity Commission if income is £5,000 or more, or if you are a CIO. You then apply to HMRC for charity tax reliefs.
Step 1: Check your purposes are charitable
A charity must exist for charitable purposes only, and those purposes must benefit the public. Examples include relieving poverty, advancing education, advancing health, protecting the environment, and advancing amateur sport. A charity cannot be set up to help one specific person, and it cannot exist mainly to benefit its founders.
Write your purposes (often called "objects") clearly and specifically. Vague objects are a common reason applications are delayed.
Step 2: Find your trustees
Trustees are the people legally responsible for running the charity. Most regulators expect at least three trustees, and a Scottish Charitable Incorporated Organisation (SCIO) must have at least three. Choose people who are not closely related, who have relevant skills, and who can give time to the role.
Trustees generally cannot be paid for being a trustee unless the governing document and the law allow it. Each trustee must be eligible – some people, such as those with certain unspent convictions, are disqualified.
Step 3: Choose a structure
The main options are:
- Charitable company limited by guarantee: registered with Companies House and the charity regulator. It has members instead of shareholders, and trustees usually also act as directors. Trustees have limited liability.
- Charitable incorporated organisation (CIO), or SCIO in Scotland: registered only with the charity regulator, not Companies House. Trustees have limited liability, and there is less dual reporting.
- Charitable trust: trustees hold and manage assets, such as money or land. Often used by grant-giving funds.
- Unincorporated association: simple and low-cost, suited to small volunteer groups, but trustees do not have limited liability and it cannot easily employ staff or own property.
A company limited by guarantee is a familiar choice if you expect to sign contracts, employ people or rent premises. A CIO or SCIO can be simpler if you want to avoid filing with Companies House. If you are unsure, take advice from your local council for voluntary service or a solicitor.
Step 4: Write the governing document
The governing document sets out what the charity does and how it is run. For a charitable company, this is its articles of association. It normally covers:
- the charity's name and purposes
- who the members and trustees are and how they are appointed
- how meetings and decisions work
- how the charity can spend its money
- what happens to remaining assets if it closes (they must go to similar charitable purposes)
Regulators publish model governing documents, which can save time.
Step 5: Register with the right regulator
Where you register depends on where the charity is based and operates.
Scotland: Every charity in Scotland must apply to the Office of the Scottish Charity Regulator (OSCR), whatever its income. You apply online, upload a signed trustee declaration for each trustee, and send a draft governing document. OSCR checks that the organisation meets the charity test.
England and Wales: You must register with the Charity Commission if your annual income is £5,000 or more, or if you are a CIO. Smaller charities that are not CIOs can still be charities but do not register.
Northern Ireland: charities register with the Charity Commission for Northern Ireland, which has its own rules.
If you form a charitable company, you will register it with Companies House first, then apply to the charity regulator.
Step 6: Apply to HMRC for tax reliefs
Being a registered charity does not automatically give you tax reliefs. You need to apply to HMRC to be recognised as a charity for tax purposes. This allows you to claim Gift Aid on eligible donations and use other reliefs.
After registration
Once registered, trustees must:
- file an annual return and accounts with the regulator
- file accounts and a confirmation statement with Companies House if it is a charitable company
- keep proper records and follow the governing document
- tell the regulator about changes, such as new trustees or a new address
Common mistakes
- Purposes that are too broad, or that benefit a private group.
- Too few trustees, or trustees who are all one family.
- Choosing a structure that does not fit what the charity will do.
- Forgetting the separate HMRC application.
How Form My Company can help
Our Charity Company Formation service (£450) forms a company limited by guarantee with charitable articles, ready for you to apply to OSCR or the Charity Commission. Setting up a not-for-profit that is not a charity? Our Company Limited by Guarantee formation costs £290. For specific wording, see our Bespoke Articles service. All our prices include VAT, with no hidden fees.
Frequently asked questions
How many trustees does a charity need?
Most regulators expect at least three trustees, and a SCIO in Scotland must have at least three. Your governing document may set a higher number.
Do I need to register my charity in Scotland?
Yes. Any organisation that wants to be a charity in Scotland must apply to OSCR, whatever its income.
When must a charity register with the Charity Commission?
In England and Wales, a charity must register if its annual income is £5,000 or more, or if it is a CIO.
Is a charity the same as a company limited by guarantee?
No. A company limited by guarantee is a legal structure. It becomes a charity only if it has charitable purposes and is registered or recognised as a charity.
Does a registered charity get Gift Aid automatically?
No. You must apply separately to HMRC to be recognised as a charity for tax purposes before you can claim Gift Aid.