Set up a community interest company (CIC)

The community interest test

This is the fundamental requirement for becoming a CIC. You must convince the CIC Regulator that your activities genuinely benefit a community broader than your company's members.

How to define your community

Your community can be:

• Geographic: Residents of a town, county, or region
• Interest-based: People sharing a common interest (environmental protection, arts access, sports participation)
• Characteristic-based: People with shared characteristics (disability, age group, profession)

The key requirement is that your community must be wider than just your members or employees. A group of colleagues at a single company, or members of a private club with restricted membership, would not qualify.

Activities that pass the test

Consider how your activities will create genuine community benefit:

• Providing services to disadvantaged groups
• Creating employment opportunities in deprived areas
• Protecting or improving the environment
• Promoting arts, culture, or heritage
• Delivering education or training
• Supporting community health and wellbeing

Choosing your CIC structure

CICs can be formed as companies limited by shares or by guarantee. Your choice affects how you can raise funding and distribute any surplus.

Which structure should you choose?

Choose limited by guarantee if:

• You want all surplus reinvested for community benefit
• You do not need to attract private investment
• Your funding comes from grants, donations, or trading income

Choose limited by shares if:

• You want to attract investors who expect some financial return
• You are comfortable with the 35% dividend cap
• You want flexibility to raise equity finance in future

Important: You cannot convert between these structures after incorporation. Choose carefully based on your long-term plans.

Social Investment Tax Relief (SITR) - now closed

SITR previously offered investors tax relief for investing in social enterprises including CICs. The scheme closed to new investments from 6 April 2023.

Registration fees

CIC registration costs slightly more than a standard company because the CIC Regulator must review your community interest statement.

Completing Form CIC36

Form CIC36 is your community interest statement - the document that explains to the Regulator why your company qualifies as a CIC. This is placed on the public register, so anyone can see it.

Writing a strong community interest statement

Your statement should clearly answer three questions:

1. What community will benefit? Be specific about who you serve (geographic area, interest group, or characteristic)
2. What activities will you carry out? Describe the services, products, or support you will provide
3. How will these activities benefit the community? Explain the positive impact and outcomes you expect

Tip: Avoid vague statements like "helping the community" - be specific about what you will do and for whom.

Registration process step by step

Before you start

1. Check your proposed company name is available on Companies House
2. Your name must include 'CIC', 'C.I.C.', or 'Community Interest Company' (Welsh equivalents permitted)
3. Gather director and shareholder/member details
4. Identify your registered office address (must be in the UK)

Documents to prepare

• Form IN01: Standard company incorporation form
• Form CIC36: Community interest statement (see above)
• Memorandum of association: Signed by all initial shareholders/members
• Articles of association: Must include mandatory CIC provisions - use the model articles from Companies House or adapt them

Submission

Submit all documents together to Companies House. The CIC Regulator reviews your community interest statement. If approved, Companies House issues your certificate of incorporation.

Timeline: Online applications are typically processed within 24 hours if straightforward. Applications requiring additional review may take 2-4 weeks.

The CIC Regulator

Unlike ordinary companies, CICs are overseen by a dedicated regulator who ensures they continue to serve community interests.

What happens after registration

Once registered, you must:

• File annual accounts: Within 9 months of your accounting reference date
• File a CIC report (Form CIC34): With your annual accounts, describing how you have benefited the community
• Pay the annual CIC report fee: £15
• File a confirmation statement: Annually (standard Companies House requirement)
• Maintain statutory registers: Directors, members, and People with Significant Control

The CIC report is unique to CICs - it demonstrates that you continue to satisfy the community interest test and shows stakeholders how you are delivering on your social purpose.

CIC vs charity - which is right for you?

Both CICs and charities pursue social purposes, but they differ significantly: