1. Introduction to CICs
A Community Interest Company (CIC) is a type of limited company in the UK created for social enterprises. Instead of focusing solely on profit, CICs reinvest most of their earnings into the community. If you’re interested in combining business with social impact, starting a CIC may be the right choice.
2. What is a CIC?
A CIC is a special type of limited company designed for businesses that aim to benefit the community rather than just shareholders. It can be either:
- Company limited by guarantee (no shareholders, profits reinvested)
- Company limited by shares (can pay limited dividends but mostly reinvests profits)
3. Benefits of Starting a CIC
- Legal recognition as a social enterprise
- Builds trust with funders and the public
- Access to certain grants and funding opportunities
- Limited liability protection for directors and members
- Flexibility of a company with a community purpose
4. Requirements for a CIC
To set up a CIC, you must:
- Be based in the UK
- Have at least one director and one shareholder/guarantor
- Create a community interest statement explaining your purpose
- Have an asset lock to ensure profits and assets are used for community benefit
5. Step-by-Step: How to Start a CIC
Step 1: Decide Your Structure
Choose between:
- Limited by guarantee (common for charities and non-profits)
- Limited by shares (suitable if you want to attract investors)
Step 2: Draft a Community Interest Statement
Explain what your CIC will do and how it benefits the community.
Step 3: Prepare Articles of Association
Rules about how your CIC will be run, including an asset lock.
Step 4: Register with Companies House
Submit:
- Form IN01 (application to register a company)
- CIC36 form (community interest statement)
- Articles of Association
- Payment of registration fee
Step 5: Approval from the CIC Regulator
The CIC Regulator reviews your application to ensure your business meets community benefit criteria.
6. Costs of Starting a CIC
- £27 – Online application fee
- £35 – Paper application fee
- Additional costs may apply if using a formation agent or solicitor
7. Ongoing Responsibilities
- File annual accounts with Companies House
- Submit a CIC annual report to the CIC Regulator, showing how your activities benefit the community
- File a confirmation statement yearly
- Pay Corporation Tax unless exempt (e.g., registered charity CICs)
8. CIC vs Charity
- CIC: More flexibility, can trade freely, easier setup
- Charity: Stricter regulations, greater tax benefits, trustees instead of directors
Many social enterprises prefer CICs for simplicity and freedom.
9. Funding for CICs
CICs can raise money through:
- Grants from social enterprise funds
- Community shares or investment
- Donations and sponsorships
- Trading income
- Government contracts
10. Common Mistakes to Avoid
- Not clearly defining your community purpose
- Choosing the wrong structure (shares vs guarantee)
- Forgetting to include an asset lock
- Missing annual reporting deadlines
Frequently Asked Questions
Q1: How long does it take to register a CIC?
Usually 2–4 weeks, depending on Companies House and CIC Regulator approval.
Q2: Can a CIC make a profit?
Yes, but profits must mostly be reinvested into the community rather than paid to shareholders.
Q3: Can a CIC pay salaries to directors?
Yes. Directors can be paid, unlike charity trustees who usually cannot.
Q4: Do CICs pay tax?
Yes, they pay Corporation Tax unless they are also a registered charity.
Q5: Can a CIC become a charity later?
Yes, but it requires restructuring and meeting charity regulations.
Q6: What’s the difference between a CIC and a normal limited company?
A CIC must benefit the community and has an asset lock, while a standard company focuses on profit for shareholders.
Conclusion
Starting a CIC is an excellent way to combine business with social good. With a clear community purpose, an asset lock, and compliance with Companies House and the CIC Regulator, you can set up a trusted social enterprise in the UK. CICs offer flexibility, credibility, and access to funding, making them ideal for entrepreneurs who want to make a positive impact.