A voluntary organisation must register as a charity if it has an annual income in excess of £5,000. This applies whether it is an unincorporated association or a company.
Under new rules it cannot register unless it can show capital or an income of £5000. Below we explain some of the advantages and disadvantages of being a registered charity and how you can register your organisation.
If you want advice, you can talk to the Charity Commission or to us. Or see the Charity Commission website www.charitycommission.gov.uk.
- There are certain tax-related benefits, particularly in the fields of income/corporation tax and capital gains tax and the group may also be eligible for special VAT treatment in some cases.
- Charities can claim tax repayments on income received on which tax has already been paid, where there are ‘Gift Aid’ donations.
- Gifts to charities are free of Inheritance Tax.
- If a charity occupies a building which it uses to further its main objectives, it will be required to pay no more than 20% of the normal business rates, and in some circumstances, you may get 100% relief.
- By becoming a registered charity, a Group may have more ‘credibility’ to both potential funders and to the public at large. Why?? Because all registered charities are monitored and governed by the Charity Commission.
- A registered charity can seek the advice, guidance and support of the Charity Commission.
Charities are subject to the rules required by the Charity Commission on what they can do, both in terms of their work and the way in which they operate. These are as follows:
- An organisation applying for charitable registration must be able to show that all of its objectives are charitable and for public benefit. In this respect the Charity Commission have provided a useful set of model objectives on their website to help organisations applying for charitable status.
- The Charity Commission imposes limitations on the political campaigning activities a charity may undertake, and applies strict rules to the trading activities that a charity may carry out. (See website, www.charity-commission.gov.uk for detailed guidance on this subject).
- The ‘Trustees’ of a charity have not been allowed to benefit financially from the charity. This is now changing.
- By law, all charities are required to comply with financial reporting obligations to the Charity Commission
How to Register
- Contact the Charity Commission for a ‘Registration Application Pack’ – or alternatively come to us.
- Read the guidance notes which set out clearly what you need.
- Make sure that you have a governing document in place.
- From the guidance notes, you will see that you have to have certain things including:
- A bank account
- At least 3 Trustees/Directors/committee members
- CRB checks where necessary
- A clear idea of what your group wishes to do and how you are going to do it
Registration of a charity at the moment takes about 2/3 months. We are told that the procedure is to be shortened. New forms have been published and must be used from 1 June 2008.
If you want advice, talk to the Charity Commission or us. Or see the Charity Commission website www.charitycommission.gov.uk.