Setting up a charity

Produced by Tolley in association with Speechly Bircham LLP
Setting up a charity

The following Trusts and Inheritance Tax guidance note Produced by Tolley in association with Speechly Bircham LLP provides comprehensive and up to date tax information covering:

  • Setting up a charity
  • Introduction to setting up a charity
  • Factors to consider before setting up a charity
  • Choosing the legal form of the charity
  • Trusts
  • Companies limited by guarantee
  • Charitable incorporated organisations (CIOs)
  • Choosing the name of a charity
  • Choosing a charity’s purposes
  • Choosing a charity’s trustees
  • More...

Introduction to setting up a charity

This guidance note is designed to set out the main practical and legal issues to consider before setting up a new charity in England and Wales. It also sets out the requirements for registering a charity.

For further detail on any of the subjects included in this note, please visit the Charity Commission website.

Factors to consider before setting up a charity

New charities are established for a number of reasons. Grant-making charities can be useful vehicles for managing charitable donations effectively and tax-efficiently. In some cases, feeding donations through a grant-making charity is the only way to obtain UK tax relief on donations that will be used to carry out charitable activities. For example, this may be the case where the intention is to transfer funding to a body established outside the European Economic Area.

A new operating charity, on the other hand, may be established to pursue a charitable objective which is notcarried out by any existing charity, or where the founder believes that there is another, more effective, way of carrying out that objective.

Charities usually cost money to set up and to run. Before a new charity is established, it is therefore important to ensure that such expense will notbe wasted. For example, anyone considering establishing a grant-making charity should ensure that it would notbe better to make direct donations to operating charities. Similarly, before establishing a new operating charity, research should be done into existing charities operating in the same field to ensure that the proposed new charity will notcreate inefficiencies or a duplication of effort.

Choosing the legal form of the charity

Various kinds of entity can be established with charitable status. Charitable status does notgenerally derive from the form of the entity but rather from the chosen purposes of the entity, and from provisions built into the entity’s governing document that ensure that its assets can only be used for such purposes, and not

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