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Charitable Company to CIO

A quick post to let you know that charitable companies are now [Jan 2018] finally able to simply covert to a CIO.

For those who are new to this a CIO is a Charitable Incorporated Organisation which essentially means it’s a charity and a limited liability structure all in one and is regulated by the Charity Commission.

Until the CIO structure was introduced (about 5 years ago) charities that needed to limit liabilities needed to register a limited company (by guarantee) in addition to the charity registration. This means essentially they report to two regulatory bodies (Charity Commission) and (Companies House).

Since the introduction of the CIO structure there have been a number of new charities opting for the CIO structure with over 13,000 CIO’s registered at the time of writing, so it would seem to be a popular choice.

Indeed many older charities (with the dual structure noted above) have been considering converting to a CIO and have been eagerly awaiting the simple conversion which is now possible.

Don’t get too excited all at once though if you are reading this and have an income of over £12,500. The simple process is to be staged in a similar way to the introduction of the CIO. The staging announced is:

Date Annual income £
1 Jan 2018  less than 12,500
1 Mar 2018 12,500 – 25,000
1 May 2018 25,000 – 100,000
1 Jun 2018 100,000 – 250,000
1 Jul 2018 250,000 – 500,000
1 Aug 2018 More than 500,000

 

Further info https://www.gov.uk/guidance/change-your-charity-structure#convert-a-charitable-company-to-a-cio

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Is CIO the Way to Go?

We’re moving a step closer to making it simple for charities to convert to a CIO (Charitable Incorporated Organisation), as the Cabinet Office has recently opened a consultation on the process (details below).

Charities may be able to convert to a CIO as (soon) as the 1st October 2016, the provisional timetable being:

  • charitable companies with an annual income greater than £500,000 convert to CIO status by 1 October 2016
  • those with an annual income of between £250,000 and £500,000 in December 2016
  • those with incomes of between £100,000 and £250,000 in February 2017
  • between £25,000 to £100,000 in April 2017
  • those with lower incomes of less than £25,000 in July 2017.

For some this will be welcome news, as it has taken some time to get to this point. Those supporting the sector’s development may remember that we were discussing the possibility and the then “new” legislation for a CIC and CIO back in the very early 2000s.

The CIC became available for social enterprises in 2005 and it was thought the CIO would follow swiftly, but it finally became available in 2013 and now the Charity Commission has reported that around half of the applications to form a new charity are using the CIO model.

The CIO model has been welcomed, prior to that, Charities needed to register with Companies House as well as the Charity Commission in order to become a limited liability legal entity. They therefore had two structures and needed to report to two regulators, the CIO streamlined this being a limited structure only reporting to the Charity Commission.

If you would like to comment on the consultation then you can do this by Respondents to the consultation can submit a response or an enquiry via email to charities-act@cabinetoffice.gov.uk. For further information on how to respond, click here.

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