What Are the Legal Requirements for Setting Up a Charity in the UK

Introduction

Starting a charity is an admirable goal, but it also comes with legal responsibilities. The Charity Commission and UK law require every charity to meet certain conditions before it can be officially recognised. These rules are designed to ensure charities operate transparently, protect the public interest, and use their funds for genuine charitable purposes.

Understanding these requirements early helps you avoid delays and ensures your charity can operate lawfully and effectively.

1. Your organisation must have charitable purposes

To qualify as a charity, your organisation must exist for one or more recognised charitable purposes under UK law. The Charities Act 2011 lists 13 purposes, which include:

The prevention or relief of poverty

The advancement of education or health

The advancement of religion

The promotion of the arts, culture, heritage, or science

The advancement of environmental protection

The relief of those in need due to age, ill health, or disability

The promotion of human rights and equality

Your activities must also provide a public benefit, meaning they must help a broad section of society rather than private individuals. When applying to register, the Charity Commission will assess whether your purpose and activities meet this test.

2. You must choose the right structure

Before registering, you’ll need to decide what legal structure your charity will take. The structure affects how your charity operates, who is legally responsible, and how you report to regulators.

The main options are:

Charitable Incorporated Organisation (CIO): The most popular choice for small to medium charities. It provides limited liability for trustees and doesn’t require registration with Companies House.

Charitable Company (Limited by Guarantee): Suitable for larger charities that need a corporate structure. It must register with both Companies House and the Charity Commission.

Charitable Trust: Used for charities that manage funds or property rather than run services.

Unincorporated Association: A simple structure for small, volunteer-run charities with minimal financial risk.

If you plan to employ staff, own property, or sign contracts, a CIO or charitable company is usually the best option.

3. You need a governing document

Every charity must have a governing document, also known as a constitution or deed. This sets out how the charity is run and includes:

The charity’s name and purpose

Rules about trustee appointments and meetings

How decisions are made

How funds should be used and managed

What happens if the charity closes

The governing document is one of the first things the Charity Commission will review when you apply to register. You can use the Commission’s model templates or create your own with professional advice if your charity’s operations are complex.

4. You must appoint at least three independent trustees

Charities in England and Wales must have at least three independent trustees to be eligible for registration. Trustees are the people legally responsible for managing the charity, ensuring it acts in the public interest and complies with the law.

Trustees must:

Be at least 18 years old (16 for some CIOs)

Not be disqualified from acting as a trustee due to bankruptcy or previous misconduct

Be independent from each other, meaning they are not closely related or financially connected

The Charity Commission expects trustees to bring a mix of skills and to meet regularly to review finances and activities.

5. Your charity must meet income and registration thresholds

Not all organisations need to register immediately. You must register with the Charity Commission if:

Your annual income is £5,000 or more, or

You are setting up as a Charitable Incorporated Organisation (CIO)

If your income is below £5,000, you can still operate as a small unregistered charity. However, you won’t have a registered charity number until you meet the threshold. Once you consistently exceed that level of income, registration becomes a legal requirement.

6. You must register with the Charity Commission

When you apply to register, you’ll need to provide:

Details of your charity’s purpose and structure

A copy of your governing document

The names, addresses, and declarations of all trustees

A financial plan showing how you’ll fund your activities

Evidence that your charity provides a public benefit

The Charity Commission will review your application to ensure everything meets legal standards. If approved, you’ll receive a registered charity number, which you must include on all official documents, websites, and fundraising materials.

7. You must keep proper financial records

Charities are legally required to keep accurate financial records showing income, expenditure, and assets. This includes donations, grants, and any other sources of income.

Each year, you must prepare:

Annual accounts

A trustees’ annual report

An annual return (for charities with income over £10,000)

These documents must be submitted to the Charity Commission within 10 months of your financial year-end. Good record keeping ensures transparency and helps build trust with donors and regulators.

8. You must follow fundraising and safeguarding laws

If your charity raises money from the public, you must comply with fundraising regulations and the Fundraising Regulator’s Code of Practice. This includes being clear about how donations are used and keeping accurate donation records.

If your charity works with children or vulnerable adults, safeguarding policies are also a legal requirement. Trustees must ensure proper background checks (DBS checks) are carried out for staff and volunteers in regulated roles.

9. You must act within charity law

All charities must comply with the Charities Act 2011, which governs how charities are run. Trustees must act in good faith, avoid conflicts of interest, and ensure the charity’s assets are used only for its stated purposes.

You cannot use charitable funds for personal benefit or political campaigning unrelated to your objectives. Serious breaches of charity law can result in penalties, suspension, or removal of trustees.

10. You must be transparent with the public

Transparency is a key legal and ethical requirement. Your charity must make information about its activities and finances available to the public. This includes publishing your governing document, annual accounts, and reports on the Charity Commission website once registered.

Being open about how you operate builds credibility and helps attract donors, volunteers, and grant funding.

Common mistakes when setting up a charity

Applying before income reaches £5,000 (unless forming a CIO)

Failing to include enough detail in the governing document

Choosing trustees who are related or financially linked

Forgetting to register with Companies House (for charitable companies)

Not setting up a proper bank account in the charity’s name

Avoiding these mistakes can save time and ensure a smoother registration process.

Conclusion

Setting up a charity in the UK requires careful planning, transparency, and compliance with legal obligations. You must define a charitable purpose, appoint trustees, choose the right structure, and create a governing document before applying to the Charity Commission.

Once registered, your charity must keep accurate records, submit annual returns, and operate for the public benefit at all times. By following these legal requirements and building a strong foundation, you can ensure your charity runs smoothly and earns the trust of both the public and regulators.