Starting a charity is closer to incorporating a company than most founders expect: a sequence of decisions and registrations that only works in the right order. Do them out of order and you end up re-drafting a constitution you have already adopted, or discovering in month eleven that a year of donations cannot be Gift Aided.

The sequence has also just changed. Two reforms land on new charities almost immediately — the revised Charities SORP for accounting periods beginning on or after 1 January 2026, and a set of higher statutory thresholds in England and Wales for financial years ending on or after 30 September 2026. For a charity founded now, the second one decides whether anybody outside your board ever has to look at your first set of accounts. Here is the whole path, in order, with the current numbers.

Step 1 — confirm your purposes are actually charitable

Charitable status is not a description you choose; it is a legal test you either pass or fail. The law sets out a closed list of charitable purposes — GOV.UK's version runs to fourteen headings, covering the relief of poverty, education, religion, health, saving lives, citizenship and community development, the arts, amateur sport, human rights, religious and racial harmony, environmental protection, animal welfare, and the efficiency of the armed forces and the emergency services.

Everything the organisation does must then be for public benefit. That is the test that quietly rules things out. You cannot set up a charity to help one named individual, however deserving. You cannot set one up whose real beneficiaries are its founders. And if you want founder control, a director's salary decided by the directors, and freedom to trade commercially, you do not want a charity at all — you want a community interest company. Our structure guide works through that fork properly, and it is the single decision most worth getting right before anything is filed.

Step 2 — choose the legal form

Three realistic options, and the choice is mostly about liability and how many regulators you want.

  • Charitable incorporated organisation (CIO). The default for most new charities. Charity status plus limited liability, one regulator, one set of accounts, and registration with the Charity Commission is free. It comes in two model forms: the foundation model, where the trustees are the only members, and the association model, where a wider membership elects them.
  • Charitable company limited by guarantee. Same limited liability, but you answer to Companies House as well as the Commission — £100 to incorporate online and £50 a year for the confirmation statement, plus a second set of filings on a second clock. Worth accepting where a funder or lender specifically expects a Companies House entity, or where you are converting an existing company.
  • Unincorporated association or trust. Cheap and quick, no separate legal personality, and trustees are personally exposed to the organisation's obligations. Fine for a small grant-giving fund; a poor idea for anything that will employ staff or sign a lease.

Step 3 — recruit trustees who will actually govern

Expect to need at least three unrelated trustees who are genuinely independent of each other. Trustees are unpaid for acting as trustees, and any payment for services beyond that has to be authorised by the governing document or the Commission — which is exactly why founders who intend to draw a salary should be looking at a CIC instead.

Funders read the board before they read the budget. A board assembled from whoever was nearest reads as a board assembled from whoever was nearest. Recruit for the gaps: someone who can read a set of accounts, someone with sector or beneficiary experience, and someone who will disagree with you in a meeting.

Step 4 — adopt a governing document

Your constitution sets out the purposes, the powers, how trustees are appointed and removed, and how decisions get made. The Charity Commission publishes model documents for both CIO forms, and starting from a model rather than a bespoke draft speeds registration up considerably — the Commission is reviewing a document it already knows. Amend the objects clause with care: it is the clause the whole application turns on, and every restricted grant you ever receive has to sit inside it.

Step 5 — register with the right regulator

  • England and Wales: apply to the Charity Commission once annual income exceeds £5,000 — except a CIO, which must register at any income level, because a CIO does not legally exist until it is registered.
  • Scotland: register with OSCR from the outset, at any income.
  • Northern Ireland: register with CCNI.

Our guide on whether your charity needs to register covers the edge cases, including excepted and exempt charities.

Step 6 — register separately with HMRC

This is the step that goes missing, and it costs real money. Charity registration and HMRC recognition for tax are two different applications to two different bodies. Until HMRC has recognised your charity for tax purposes, you cannot claim Gift Aid or the Gift Aid Small Donations Scheme, and the reliefs set out in our Gift Aid and tax reliefs guide are unavailable to you.

The good news is that a late start is recoverable. A Gift Aid claim can be made up to four years after the end of the financial period in which the donation was received, so declarations collected before recognition comes through are not wasted — but only if you collected them. Start on day one.

The small donations scheme is the underused half. It lets you claim a top-up equivalent to Gift Aid on cash and contactless donations of £30 or less where no declaration was obtained — on up to £8,000 of such donations in a tax year, worth £2,000. Two conditions bind it: your GASDS claim cannot exceed ten times the value of the donations you claim ordinary Gift Aid on in the same year, and the claim must be made within two years of the end of the tax year — half the window Gift Aid allows. The old rule requiring two complete tax years of existence before claiming was removed from 6 April 2017, so a first-year charity can claim.

Worked example — a new CIO's first year. The charity is illustrative; every threshold, rate and deadline is the real one.

A community arts CIO registers on 1 September 2026 and adopts a 31 August year end. Registration costs nothing. In its first year to 31 August 2027 it receives £38,400: £14,000 of restricted grants, £9,200 of individual donations (of which £6,800 are covered by Gift Aid declarations), £7,400 in cash and contactless collections of £30 or less, and £7,800 of room hire and ticket income.

Gift Aid: £6,800 × 25% = £1,700.

Small donations scheme: the £7,400 of collections is under the £8,000 annual cap, and the matching rule allows up to ten times the £6,800 of Gift Aided donations — £68,000 — so it does not bite. Top-up: £1,850.

Total reclaimed from HMRC: £3,550, or 9.2% of everything the charity raised, for the cost of a box of declaration slips and a habit of counting the tins on the night.

Scrutiny: gross income of £38,400 for a year ending after 30 September 2026 falls under the new £40,000 independent examination threshold, so no external examination is required. Under the old £25,000 threshold this charity would have needed one.

Accounts: as a non-company charity well below £500,000, it can prepare receipts and payments accounts, so SORP 2026 does not apply to it at all.

Deadline: annual return, trustees' annual report and accounts to the Charity Commission by 30 June 2028 — ten months after the year end.

Your first-year compliance calendar

  • Annual return to the Charity Commission, within ten months of your financial year end. Every registered charity files one, at every income level, and CIOs file regardless of size.
  • Trustees' annual report — your activities, achievements and public benefit. Increasingly the first thing a funder reads, and the cheapest fundraising asset you will ever produce.
  • Accounts on the right basis. Non-company charities under £500,000 of gross income may use receipts and payments accounts for years ending on or after 30 September 2026 (previously £250,000); above that, accruals accounts under the SORP — see our accounts guide.
  • Independent examination once gross income exceeds £40,000, up from £25,000. Above £500,000 the examiner must belong to a specified professional body. Audit starts at £1.5 million of gross income, with the asset-based trigger rising to £5 million. Our post on SORP 2026 and the new thresholds has the dates and the detail.
  • Companies House filings too, if you chose a charitable company: accounts within nine months of the year end, plus the confirmation statement.
  • Gift Aid and GASDS claims — four years and two years respectively.
  • Payroll and pensions from your first employee, including auto-enrolment.

What to do this week

  1. Write your objects clause in one paragraph and test it against the fourteen purposes. If you cannot say which heading you sit under, you are not ready to apply.
  2. Pick the structure and stop revisiting it. For most new charities that will employ anyone or sign anything, that is a CIO on the Commission's model constitution.
  3. Open the bank account early. Charity accounts routinely take weeks, need two signatories, and cannot be rushed at the point a grant lands. Set up dual authorisation on payments while you are there.
  4. Set up fund-aware bookkeeping before the first transaction. Every pound in gets tagged restricted or unrestricted the day it arrives. Retrofitting that after a year of mixed records is the expensive way round, and our post on restricted and unrestricted funds explains why the bank balance lies without it.
  5. Start collecting Gift Aid declarations now, even before HMRC recognition comes through. You have four years to claim, but only on declarations you actually hold.

Or skip the untangling

We help social founders choose a structure, register with the right regulator and with HMRC, set up fund-coded bookkeeping from the first transaction, run Gift Aid and GASDS properly, and get through year one without a surprise — from £39 + VAT a month. Start here.