Should Your Charity Become a CIO?

A charitable incorporated organisation is a charity that is also a company-like legal body, registered only with the Charity Commission rather than with both the Commission and Companies House. Section 205 of the Charities Act 2011 puts it in five words — "A CIO is a body corporate" — and adds that it must have "a constitution", "a principal office, which must be in England or in Wales", and "one or more members". The practical effect is that the charity, not its trustees, holds the contracts, the lease and the liabilities.

If your charity is an unincorporated trust or association and its trustees are personally signing leases, employment contracts or grant agreements, a CIO is probably worth considering. If it is already a charitable company, converting is mostly an administrative simplification. Either way there are two things nobody tells a small charity up front, and both are below.

What actually changes

	Unincorporated trust or association	CIO	Charitable company
Legal personality	None — trustees contract personally	Body corporate (s.205)	Body corporate
Registered with	Charity Commission, if income is over £5,000	Charity Commission only, always	Companies House always; Commission if income is over £5,000
Can stay off the charity register below £5,000 income	Yes (s.30(2)(d))	No — registration is what creates it	Yes (s.30(2)(d))
Must file accounts with the Commission below £25,000 income	No	Yes — always	No
Members' liability if wound up	N/A — trustees exposed personally	None, or capped per member (s.205(3))	Limited by a nominal guarantee set in the articles
Register of charges over property	None	None	Companies House maintains one

On the liability row, section 205(3) gives the constitution a choice: the members "may be—(a) not liable to contribute to the assets of the CIO if it is wound up, or (b) liable to do so up to a maximum amount each." Both of the Commission's model constitutions carry that choice through as clause 8, and it is a choice the charity makes rather than a default. Option 1 reads: "If the CIO is wound up, the members of the CIO have no liability to contribute to its assets and no personal responsibility for settling its debts and liabilities." Option 2 makes each member "liable to contribute to the assets of the CIO such amount (but not more than £[…]) as may be required for payment of the debts and liabilities of the CIO". If you are already a CIO, check which option clause 8 of your own constitution adopted — do not assume it is the first.

The two bold entries are the ones that surprise people, and they both cut against a very small charity.

A CIO has no minimum-income exemption from registration. Ordinarily, Charities Act 2011 section 30(1) says "Every charity must be registered in the register unless subsection (2) applies to it", and subsection (2) excepts a charity whose gross income does not exceed £5,000. That exception is unavailable to a CIO: regulation 6(3) of the Charitable Incorporated Organisations (General) Regulations 2012 states flatly that "Sections 30 to 34 of that Act do not apply." It cannot work any other way, because a CIO is created by registration — section 210(1) provides that "Upon the registration of the CIO in the register of charities, it becomes by virtue of the registration a body corporate". There is no CIO sitting outside the register waiting to see whether it needs to join.

A CIO files accounts with the Commission whatever its income. Section 163(1) normally sets the filing point at £25,000: "Where a charity's gross income in any financial year exceeds £25,000, a copy of the annual report required to be prepared under section 162 in respect of that year must be transmitted to the Commission by the charity trustees". For a CIO, section 163(3)(a) removes the threshold — "the requirement imposed by subsection (1) applies whatever the charity's gross income is". A £9,000-income CIO uploads a trustees' annual report and accounts every year; a £9,000-income unincorporated charity does not.

So a village hall committee with £6,000 a year and no employees, no lease and no contracts is taking on real annual work in exchange for protection it may not need. A playgroup with a lease, two part-time staff and a council contract is in a completely different position, and the protection is the whole point. Our annual return guide sets out what the filing actually involves.

The two routes in are not equally easy

This is the single most consequential thing to establish before you spend any money on advice, because the answer depends entirely on what your charity is today.

If you are a charitable company, you convert. Section 228(1) provides that "A charitable company may apply to the Commission to be converted into a CIO", and the Commission's guidance describes the effect: "Registered charitable companies can apply to the Commission and use a simple legal process to convert to a CIO, which means that the charity continues to exist but in a different form." Same body, same bank account, same contracts, same charity number in practice. Two categories cannot use it, per section 228(2): a company with share capital where the shares are not fully paid up, and an exempt charity. A community interest company has its own route.

If you are unincorporated, there is no conversion — you build a new charity and move everything across. Part 11 of the Charities Act 2011 contains conversion provisions for charitable companies (s.228) and registered societies (s.229), and a separate route for community interest companies (s.234). There is no equivalent section for a trust or an unincorporated association, and the Commission's guidance sets out the actual sequence. Changing from an unincorporated charity to a CIO involves "setting up and registering a new CIO", then "transferring your charity's assets to the new CIO" and making arrangements about its liabilities, then "dealing with any permanent endowment, designated land or special trusts", and finally "closing your charity".

That is four projects, not one. The new CIO goes through registration like any other applicant. Assets have to be transferred by proper documentation — the guidance mentions preparing and executing "the correct documentation, such as a pre-merger vesting declaration". The Commission also treats the whole exercise as a merger: "Changing structure is a form of merger. Consider if you can, or must, register the merger." And then the old charity is closed and removed from the register.

Two practical traps in that sequence:

• Permanent endowment, designated land and special trusts do not simply move. The guidance calls these out separately for a reason. If your charity holds land given for a specific use, or a legacy fund it may only draw income from, get advice before starting rather than after.
• Funders and HMRC need telling. A new CIO is a new legal entity with a new charity number. Gift Aid registration, bank mandates, grant agreements, Land Registry title and any lease all have to follow. Grant funders in particular sometimes treat a structure change as a new application.

The Commission says twice on the same page that this is a place for professional help: "Get professional advice for any part of the process if you need it", and "You should take appropriate professional advice, for example if your charity has employees."

One drawback that is out of date, and one that is not

Search for CIO conversion and you will find guidance saying that a CIO's constitutional changes only take effect once the Commission registers them, which makes a CIO slower to amend than a company. That was true. It is no longer the general rule.

Section 227 of the Charities Act 2011 was rewritten by the Charities Act 2022, with subsections (2) to (5) omitted from 7 March 2024. What stands now splits amendments in two. A regulated alteration to the CIO's purposes "takes effect—(a) when it is registered by the Commission, or (b) if later, on the date specified for that purpose in the resolution containing the amendment" (s.227(1A)). Everything else takes effect "(whatever the date on which the amendment is registered by the Commission)—(a) on the date the resolution containing it is passed, or (b) if a later date is specified for that purpose in the resolution containing the amendment, on that later date" (s.227(1B)).

So a CIO that resolves to change its quorum, its financial year or its trustee term lengths gets the change immediately, and simply notifies the Commission — within 15 days of the resolution, per s.227(1). Only changes to purposes, dissolution provisions or trustee-benefit authorisations still wait: section 226(1) provides that an amendment making a regulated alteration "(a) requires the prior written consent of the Commission, and (b) cannot take effect if such consent has not been obtained", and section 226(2) defines those as "any alteration of the CIO's purposes", "any alteration of any provision of the CIO's constitution directing the application of property of the CIO on its dissolution", and any alteration authorising a benefit for trustees, members or connected persons. Our guide to what the Charities Act 2022 changed covers this alongside the other amendment powers the Act introduced.

The drawback that has not gone away is security over property. Companies House maintains a register of charges; the Charity Commission does not. A lender taking security over something other than land has a public register to rely on with a charitable company and does not with a CIO. If your charity expects to borrow against assets, raise it with the lender before you change structure rather than after.

A decision routine for a small board

Work through these in order. The first question that returns a clear yes usually settles it.

1. Do trustees currently sign anything in their own names? A lease, an employment contract, a service agreement, a loan, a funder's contract with clawback. If yes, incorporating is about removing a real personal exposure — see our guide to charity trustee liability for what that exposure actually is.
2. Is income under about £25,000 and likely to stay there, with no staff and no property? Then the annual filing you take on is a genuine cost against protection you may not be using. Revisit when something changes.
3. Which route applies — conversion or rebuild? Charitable company: s.228 conversion, straightforward. Unincorporated: a new CIO plus a transfer plus a closure. Cost and timescale differ by an order of magnitude.
4. Do you hold permanent endowment, designated land or a special trust? If yes, stop and take advice before doing anything else.
5. Will you need to borrow against non-land assets? If yes, check the lender's position on CIOs first.
6. Have you a realistic plan for the follow-through? HMRC, bank, funders, Land Registry, insurers, pension provider. This is the part that overruns.

Most small charities that should incorporate know it already, because a trustee has been asked to sign something personally and did not like it. The ones that get into difficulty are usually the ones that incorporated because it sounded more professional, and then discovered they had signed up to annual accounts filing at £8,000 of income.

Whatever structure you land on, the underlying trustee duties do not change — they are set out in our guide to charity trustee roles and responsibilities, and the accounts you have to prepare are covered in the charity accounts guide. You can also check which reporting tier your income puts you in with our free SORP tier calculator.

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This guide covers charities registered in England and Wales. CIOs do not exist in Scotland, where the equivalent is a Scottish Charitable Incorporated Organisation (SCIO) under separate legislation regulated by the Office of the Scottish Charity Regulator; Northern Ireland has no CIO form. Every provision cited here carries a territorial extent of England and Wales. Changing legal structure is a legal process with tax, property and employment consequences — this is general guidance based on the Charities Act 2011 and the Commission's published guidance, and a charity holding land, permanent endowment or employees should take advice from a charity solicitor before starting.

Sources

• Charities Act 2011, section 205 — nature of a CIO
• Charities Act 2011, section 210 — effect of registration of a CIO
• Charities Act 2011, section 226 — regulated alterations
• Charities Act 2011, section 227 — registration and coming into effect of amendments
• Charities Act 2011, section 228 — application for conversion by charitable company
• Charities Act 2011, section 30 — duty to register
• Charities Act 2011, section 163 — transmission of annual reports to the Commission
• Charitable Incorporated Organisations (General) Regulations 2012, regulation 6
• Change your charity structure — GOV.UK
• Setting up a charity: model governing documents (association and foundation CIO constitutions) — GOV.UK
• How to transfer charity assets — GOV.UK