What is a Community Interest Company (CIC)?

The short definition

A Community Interest Company (CIC) is a type of limited company created under the Companies (Audit, Investigations and Community Enterprise) Act 2004 for people who want to run a business for community benefit. It is registered at Companies House and approved by the Office of the Regulator of Community Interest Companies.

Two features make it different from an ordinary company: it must pass a community interest test, and it carries an asset lock.

The community interest test

When you register, you submit a community interest statement (form CIC36) describing what your company will do and who benefits. The Regulator approves it if a reasonable person would consider the activities to be carried on for the benefit of the community. Political campaigning organisations and companies serving only their own members do not pass.

The asset lock

The asset lock stops the company’s assets and surpluses being extracted for private gain. In practice it means:

• Assets can only be transferred at full market value, or to another asset-locked body.
• Surpluses are reinvested in the community purpose.
• A CIC limited by shares can pay dividends, but only within the caps set by the Regulator, and only if the articles allow it.
• On dissolution, remaining assets pass to another asset-locked body.

CIC limited by guarantee or by shares?

Limited by guarantee is the common choice for grant-funded, community-run organisations. There are no shareholders, no dividends, and members guarantee a nominal amount (usually £1).

Limited by shares suits CICs that want to raise investment or reward founders modestly. Dividends are capped and the asset lock still applies.

CIC vs charity vs ordinary limited company

• CIC — relatively quick to set up, can generate trading income consistent with its community purpose, and directors can be paid. No charitable tax reliefs, and some grant funders are restricted to registered charities.
• Charity — access to a wider pool of trusts and foundations plus reliefs such as Gift Aid, but slower to register, heavier governance, and trustees are usually unpaid.
• Ordinary limited company — full commercial freedom, no asset lock, and very limited access to grant funding.

A CIC sits between the two: a locked-in social purpose with the operational freedom of a company. The trade-off shows up at funding time, which is the problem GrantNest is built around.

How to set up a CIC

1. Decide your community purpose and who benefits.
2. Choose limited by guarantee or by shares.
3. Pick a name ending in “CIC” or “Community Interest Company”.
4. Appoint at least one director and adopt CIC model articles.
5. Register online with Companies House, submitting form CIC36 with your community interest statement.
6. Once approved, open a bank account and file a CIC34 community interest report each year alongside your accounts.

Current fees, forms and model articles are published on GOV.UK.

Ongoing obligations

• Annual accounts and confirmation statement to Companies House.
• A CIC34 report each year explaining what you did for the community and how stakeholders were consulted.
• Corporation Tax — CICs are companies for Corporation Tax purposes and do not receive a general tax exemption.

What this means for funding

Because a CIC is not a charity, a large share of published grant opportunities do not apply to you — and funders rarely make that obvious on the first page. The realistic routes are covered in how to get funding for a CIC in the UK and grants for CICs.

Frequently asked questions