Here's a conversation we have most weeks with a new CIC founder: "We're a social enterprise, so we don't pay tax, right?" Wrong — and it's an expensive misunderstanding to carry into your first year-end.

The core fact

A Community Interest Company is an ordinary company for tax purposes. It pays corporation tax on its profits at the same rates as any other company (19% up to £50,000 of profit, 25% above £250,000, with marginal relief between). The asset lock and the social mission change what you can do with surpluses — not whether they're taxed. Only registered charities get the broad corporation tax exemption, and a CIC is explicitly not a charity.

Why the confusion is so common

"Social enterprise", "not-for-profit" and "community interest" all sound tax-exempt. They're not tax statuses at all — they're descriptions of mission and structure. HMRC cares about your legal form, and a CIC's legal form is "company". A CIC can be run on a not-for-profit basis and still owe corporation tax on any surplus it generates in a year.

Keeping the bill low — legitimately

  • Reinvest deliberately. Corporation tax is on profit. Money genuinely spent on your mission during the year — programme costs, salaries, equipment — is deductible and reduces profit. Surplus retained is taxed; surplus deployed to the cause often isn't.
  • Claim every allowable cost. The same discipline as any company — capture everything (FreeAgent, included in our packages, makes this automatic).
  • Capital allowances on equipment via the Annual Investment Allowance.
  • Pay directors properly. CIC directors can be paid; salaries are deductible (run correctly through payroll).
  • Consider whether you should be a charity instead. If your model is grant- and donation-funded for a clearly charitable purpose, the corporation tax exemption and Gift Aid available to a charity may outweigh a CIC's speed and control. That's a structure question worth revisiting — see our structure guide.

What you must file

A CIC files a company tax return (CT600) and pays corporation tax like any company, plus a CIC34 community interest report and accounts at Companies House. Two obligations, both on the clock. Miss the CT600 and HMRC penalises you; miss the CIC34 and you're in trouble with the CIC regulator.

None of this is a reason not to be a CIC — it's a brilliant structure for mission-led businesses. It's just a reason to go in with your eyes open and your corporation tax planned, not discovered. That's exactly what our social-sector packages handle, from £39 + VAT a month.