The nonprofit sector is growing rapidly in the United Kingdom. However, understanding the role these organizations play and their impact can be challenging. Passionate individuals are choosing to set up a nonprofit in the UK every day and this step-by-step guide can help you build a solid foundation for your organization. Plus, we’ll walk you through the legal framework and requirements to start a nonprofit in the UK.
Nonprofits hold a critical role in society, whether providing health care options, supporting those in poverty, educating the public about civil issues, or brightening the community with artistic creativity. Setting up a nonprofit organization in the UK is an effective way to make these impacts. Keep reading to explore how to set up a nonprofit organization UK.
If you’re interested in starting a nonprofit in the United Kingdom (UK), you aren’t alone. In 2023, 168,893 new charities were registered, and another 20,000 were formed without registering. In this article, we’ll delve into different options for nonprofits in the UK, legal structures, and requirements and offer a step-by-step guide to get you started.
The name nonprofit can be confusing. These organizations can make substantial income, but all funds must be cycled back into the organization to support its missions. Between 2011 and 2023, this workforce has grown by 24% or 180,000 people. While some of this sector has shrunk since the COVID-19 pandemic ended, the growth of this community cannot be ignored.
With this in mind, it’s understandable why so many people ask how they can set up a nonprofit in the UK. In the UK, a nonprofit organization is any non-business organization formed to provide programs, services, or funds to help further cultural, educational, religious, or professional objectives.
While you may be eager to dive into setting up your nonprofit organization, there are a few things to consider before you begin. It’s best to develop a plan for what you hope to accomplish and how. There are a few significant steps you should take in the beginning.
The first step to planning your nonprofit is determining your nonprofit’s purpose or mission. According to the Charities Act 2011, a charity’s purpose must fall under one of the following 12 specific headings:
Charities cannot have commercial or political purposes. Other nonprofit organizations are not held to these stringent standards.
In the beginning, your purpose may be vague. After defining your purpose, you must ask yourself a few key questions:
Answering these questions should help you create a detailed mission and vision statement for your nonprofit. When writing your mission statement, you must share who you’re helping, why, and how. Your vision statement should help donors visualize what you hope to accomplish with your services and programs.
A mission statement is also the first step to developing a business plan for your new nonprofit. Business plans can help you establish goals, market to donors and beneficiaries, attract trustees, and solicit funds. As part of your business plan, it’s best to run a SWOT analysis to understand your community better and develop a marketing plan to reach out to the public and find new donors.
Setting up a nonprofit in the UK should never be a one-person job. Forming an effective team in the beginning will provide support and make the process easier. The UK has several rules and regulations for nonprofit trustees, including:
Disqualifications for trustees include:
Trustees or board members ensure the charity carries out its purpose. They must comply with the UK law and the charity’s governing document. While acting on the charity’s behalf, trustees must manage resources and act in its best interest. Finding the right trustees or board members can be time-consuming and frustrating, so it’s best to start the process early.
When soliciting and choosing board members, it’s important to be clear about your needs and requirements and to find individuals with the necessary skills and personal connections. UK nonprofit laws require two unconflicted trustees, so if you have a couple on the board, there must be at least two additional board members to counteract their vote. Each of your board members must also sign a trustee declaration, declaring that they are willing to serve, understand the charity’s purpose, and have passed any required security checks depending on your beneficiaries. Be sure to print and save these forms as a PDF.
Now that you have a concrete plan to set up a nonprofit in the UK, and established a team to help, it’s time to develop a legal structure and register your nonprofit. Almost all charities must register with the Charity Commission if their income exceeds £5,000 (CIOs should register even if their income is less than this).
Choosing a name can be fun but may take longer than expected. If you’re struggling to find a compelling name that shares your mission, we’ve included a naming checklist to help.
Choosing a structure for your nonprofit affects how you will operate in the UK. Some of the questions you’ll want to ask include:
Remember, you can change your structure if your trustees decide a new structure is best for the organization.
There are four different nonprofit legal structures you can choose from when you set up a nonprofit in the UK:
After choosing a structure, it’s time to create a governing document. Your business plan should have most of the required information, but there are a few more that are necessary, including:
Now, it’s time to complete the online registration form with the Charity Commission. In addition to an introduction to your organization, your application must include the following:
| About the charity | Copy of Governing document Are you replacing an existing charity or not? Charity name and structure |
| Classification | Areas in which you work How to deliver your services Beneficiaries Location |
| Public benefits | How you do what you do Benefit it creates Grant-making and membership fees |
| Property | Do you own or use property Copy of lease |
| Contact information | Primary contact for the charity: Role, email, phone number, address Organization's website |
| Regulators | Any applicable regulators HMRC Gift Aid number |
| Finance | Accounts Estimated gross income Bank account details Financial year-end date Sources of income Tax issues |
| Connections | Links to a trustee or founder or any organization connected with them (employment, goods/services, benefits, links to other nonprofits) |
| Trustee Details | Upload a safeguard policy Trustee numbers and details: Names Addresses Emails Phone numbers Dates of birth |
| Declaration | Any additional information |
After you submit the form, the organization and each trustee will receive an email with a PDF copy of your application. The Commission’s response can take a few weeks, up to thirty days.
While you wait for the Commission’s response, you can register for Gift Aid. Unregistered charities and Community Amateur Sports Clubs (CASC) can also register and claim Gift Aid. All other CICs cannot claim Gift Aid.
Gift Aid is a unique UK fundraising scheme that benefits nonprofits and donors. Gift Aid is worth £1.3 billion to the charitable sector. Donors who give via Gift Aid can claim an extra 25p for every donation of £1. Larger donors can claim additional tax relief on Gift Aid from their regular tax rate. Registering with the HMRC may also take up to six weeks to process.
Before registering with HM Revenue and Customs (HMRC), you must have:
It can take up to six weeks to process your request. You will receive a Gift Aid number (two letters or an X and up to five numbers) when approved. Nonprofits that use Donorbox can collect Gift Aid using our online donor forms.
When determining your nonprofit’s structure, there are essential oversight details you must understand. UK nonprofit charities (CIOs) are subject to the control of the High Court’s charity law jurisdiction. The high court is the civil court of unlimited civil jurisdiction in England and Wales. Scotland, Northern Ireland, the Isle of Man, and the Channel Islands fall under a separate jurisdiction.
This court has the power to make decisions about the administration and purpose of your charity. Your governing documents must adopt the law of England and Wales and cannot be subject to any other country’s jurisdiction. UK nonprofit charities must also have most trustees and administration primarily located in England and Wales.
Trusts and unincorporated associations can make changes to governing documents with trustee and member resolutions, while CICs and CIOs must get the Commission’s authority. These changes can include:
UK nonprofits with a gross annual income of £25,000 must have their accounts independently audited unless their charity’s governing document states otherwise. The Companies Act 2006 removed special rules for the audit of accounts of small charitable companies but also required audits of certain charitable companies. All nonprofit charities in England and Wales must send an annual report to the Charity Commission.
Pro Tip: UK nonprofits can use their annual reports to raise funds throughout the year. Check out this article for tips on how best to do this.
Nonprofits registered with HMRC receive several tax benefits. These organizations must be based in the UK and established for charitable purposes. Nonprofits registered with the Charity Commission do not pay tax on most income, including:
To be tax-free, all income must be used to achieve the charity’s mission.
CASCs do not pay taxes on money used to promote participation and provide facilities for eligible sports, including:
UK charities and nonprofits are becoming significant players in the economy, but few understand the impact they can have. This step-by-step guide allows nonprofit founders to develop a purpose, mission, team, and business plan before filing legal documentation. The UK has a simple online process to set up a new nonprofit. Once you’ve finished this process, Donorbox can help you raise funds for your organization with Gift Aid and other funding sources.
Create customized donation pages and forms, sell event tickets, and run peer-to-peer campaigns to collect start-up funds and other donations.
Visit our website to learn more about products available for nonprofits of every size, and sign up to receive weekly tips and fundraising resources.
Kristine Ensor is a freelance writer with over a decade of experience working with local and international nonprofits. As a nonprofit professional she has specialized in fundraising, marketing, event planning, volunteer management, and board development.
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Kristine Ensor