Changing Your Charity’s Financial Year

You cannot change your charity’s financial year or period if your latest annual return and accounts (if required) are overdue.

charity collecting tinRules for charities that are not companies

If your charity is a charitable incorporated organisation (CIO) or unincorporated (not a company) you can change the financial year or period to run for more or less than 12 months.

It needs to be a minimum of 6 months, and no longer than 18 months.

You can only:

  • change the dates for your current financial year
  • make a change once every 3 years

Changing your financial year or period will also change your deadline for filing the annual return and accounts.

Rules for charities that are companies

If your charity is incorporated (a company) you can shorten your financial year or period as often as you’d like.

The minimum period you can shorten it to is 1 day.

You can lengthen your company’s financial year to a maximum of 18 months, but this can only be done once every 5 financial periods.

Rules for newly registered charities

If your charity is newly registered, and you have not submitted an annual return you will need to request permission to change your financial year.

To sign in and change your financial year you will need your:

This password gives people in your charity access to detailed information about your charity and individuals connected with it.

When giving access to this password you need to have measures in place to make sure the system is only used for proper purposes, and that the information accessed through the Commission’s services will be treated carefully and sensitively and in accordance with legal requirements including the General Data Protection Regulations (GDPR).

Read the privacy notice before you use the service.

Converting A Charitable Company To A Charitable Incorporated Organisation (CIO)

We're now a Charitable Incorporated Organisation (CIO) - Raising Futures  KenyaThe main advantage of CIOs over charitable companies is that CIOs don’t have to register with and send accounts to Companies House as well as the Charity Commission.

Changing to a different charitable structure usually involves setting up a new charity, transferring your original charity’s assets and liabilities to it then closing your original charity.

The conversion process should be simple and straightforward in most cases. As part of this process, the new CIO Constitution and Special Resolution will need to be included before submission to the Commission.

Using this process means that the charity continues to exist but in a different form. This means you’ll be able to keep the charity’s existing name and charity number.

You should also be able to keep the charity’s existing bank accounts and in most cases the new CIO should receive any legacies left to the original charitable company.

To change a company into a CIO you need to apply to the Charity Commission here.

The Commission will liaise with Companies House to ensure that necessary records are updated correctly. This will mean that the date of conversion of the charitable company to a CIO – as shown on the public register of charities – will match the date of removal of the charitable company at Companies House.

Please note that due to limited resources, your application may be rejected if:

  • complete documentation is not sent or received
  • your charity is not in compliance with its reporting requirements to the Charity Commission and Companies House
  • your charity has made any changes to the new CIO governing document that would require the Charity Commission’s approval including:
    • name change, except a minor change such as removing limited or company and replacing it with CIO and also if the name is not one that is regulated on the business register and no approval has been submitted with the application
    • any additional trustee benefits especially if there is an express prohibition in the company’s governing document
    • amendments to the dissolution clause that will change the spirit of the intention of who receives the funds on dissolution

More information about changing your charity’s structure can be found here

Setting Up A Social Enterprise

Related imageYou must choose a business structure if you’re starting a business that helps people or communities (a ‘social enterprise’).

If you want to set up a business that has social, charitable or community-based objectives, you can set up as a:

  • limited company
  • charity, or from 2013, a charitable incorporated organisation (CIO)
  • co-operative
  • community interest company (CIC)
  • sole trader or business partnership

If you’re setting up a small organisation like a sports club or a voluntary group and do not plan to make a profit, you can form an ‘unincorporated association’ instead of starting a business

Social enterprises are distinct from traditional charities or voluntary organisations in that they generate the majority, if not all, of their income through the trading of goods or services rather than through donations.

Charity Types

You need to choose the right structure for your charity, depending on whether you need it to have a corporate structure and whether you want to have a wider membership

There are four main types of charity structure:

  • charitable incorporated organisation (CIO)
  • charitable company (limited by guarantee)
  • unincorporated association
  • trust

Your charity structure is defined by its ‘governing document’ (the legal document that creates the charity and says how it should be run

More detailed information can be found here

Charity Registration

When to apply to register your charity

Usually, you must register with the Charity Commission if your charity is based in England or Wales and has over £5,000 income per year.  The commission will take action to secure compliance if it identifies a charity which isn’t registered but should be.

If your charity is a charitable incorporated organisation (CIO) it must register whatever its income.

Charities that don’t have to register

Small unincorporated charities

If your charity is based in England and Wales and isn’t a CIO, you don’t have to apply to register it if its annual income is less than £5,000.  But you can still apply to HM Revenue and Customs for recognition as a charity to get charity tax breaks and claim gift aid.

You can apply to the commission to register this sort of charity voluntarily, but the commission will only consider applications in exceptional circumstances.  For example, if you can prove that your charity has been offered significant funds but has to provide a registered charity number before it can receive the funds.

More details can be found here

Changing Your Charity’s Structure

When to change charity structure

Changing to a different charitable structure usually involves setting up a new charity, transferring your original charity’s assets and liabilities to it then closing your original charity.

Your charity’s legal structure sets out what type your charity is. There are four common types of charity structure:

  • charitable incorporated organisation (CIO) – there are 2 structures; association CIO and foundation CIO
  • charitable company (limited by guarantee)
  • unincorporated association
  • trust

Your charity’s legal structure determines:

  • who will run it and whether it will have a wider membership
  • whether it can enter into contracts or employ staff in its own name
  • whether its trustees are personally liable for what it does

A “Changing Charity Structure Checklist” can be found here

Charitable Incorporated Organisations – CIOs

http://www.taylorbracewell.co.uk/cms/img_articles/charities1.jpegThe Charitable Incorporated Organisation – CIO –  is a relatively new form of incorporated legal structure that is designed to meet the particular needs of a charity and is only available to charities.  A CIO is a corporate body which is not a company incorporated under the Companies Acts; it is therefore not subject to company regulation. Neither its existence nor any charges it creates have to be registered at Companies House.

The corporate structure provided by the CIO meets a demand from the charitable sector for a structure which gives a charity a legal personality of its own, enabling it to conduct business in its own name, rather than in the names of its trustees.

More information can be found on the Government website: https://www.gov.uk/guidance/charity-types-how-to-choose-a-structure