A community interest company, or CIC, is a limited company that exists to benefit a community rather than to make its owners rich. It trades like any other business — it sells things, employs people, pays its directors and pays Corporation Tax — but its assets and most of its profits are legally locked to its community purpose. It is approved and overseen by a regulator, and that lock is permanent. It suits people running something with a social purpose that earns most of its own income.
At a glance
| Feature | Detail |
|---|---|
| What it is | A limited company whose assets and profits are locked to a community purpose |
| Who approves it | The Regulator of Community Interest Companies, alongside registration at Companies House |
| The asset lock | Money and assets must stay in the community purpose, including if the CIC closes |
| Paying shareholders | Only up to a capped share of profits, and only if it is limited by shares |
| Paying yourself | Directors can be paid a salary for the work they do, like any company |
| Tax | Corporation Tax as normal — a CIC is not a charity and does not get charity tax reliefs |
| Extra paperwork | An annual CIC report on top of the usual company accounts |
| Reversible? | No. A CIC cannot be turned back into an ordinary company you could sell |
A CIC is one of the structures a UK business can take, alongside sole trader, limited company, partnership and LLP. Our business structures guide compares them; this page explains CICs properly.
What a CIC actually is
Start with what it is not. It is not a charity, and it is not a special kind of grant. A CIC is an ordinary limited company that has agreed to two extra conditions in exchange for being publicly recognisable as a community business.
The first condition is the purpose: the company must exist to benefit a community, and it has to say who that community is and what it will do for them. The second is the asset lock: the money and property inside the company have to stay pointed at that purpose, and cannot be quietly taken out for private benefit.
Everything else works like a normal company. It can charge for what it does, run at a profit, borrow money, employ staff, pay its directors a proper salary, and build up reserves. The profit is not distributed to owners the way an ordinary company's is — it goes back into the work, or, if the CIC is limited by shares, a capped slice of it can be paid out as dividends.
The community can be broad or narrow — a town, a neighbourhood, people with a particular condition, an age group — but it has to be wider than just the people running it. The regulator applies a community interest test, in essence asking whether a reasonable person would agree that the activities benefit the community you have named.
The community interest statement and the regulator
CICs have their own regulator: the Regulator of Community Interest Companies. It approves new CICs, oversees the ones that exist, and can step in if a CIC stops serving its purpose. GOV.UK's guidance on setting up a community interest company is the authority on the process.
The document at the centre of it is the community interest statement. It is a short declaration made when you apply, and it does the real work: it says what the company will do, which community will benefit, and how. The regulator reads it and decides whether the CIC is approved. A vague statement is the most common reason applications come back — "help the local area" says nothing, while "run a low-cost repair workshop for residents of two named estates and train unemployed under-25s in bike mechanics" says exactly what you are for.
After that, the reporting is annual. As well as the accounts and confirmation statement every limited company files, a CIC files a CIC report each year setting out what it has done for its community, who it consulted, and what its directors were paid. That report is public, and it is the price of the badge.
The asset lock
The asset lock is the heart of the structure, and it is worth understanding before you commit rather than after.
It means the assets of the CIC — cash, equipment, a building, the value of the business itself — belong to the community purpose, not to the people running it. In practice, three things follow.
You cannot take assets out for private benefit. The company can pay fair wages, fair rent and fair prices to suppliers, including to directors who genuinely do the work. What it cannot do is transfer assets out at less than they are worth to benefit an individual.
You cannot sell the business and keep the money. This is the one that surprises people. If you build a CIC into something valuable, that value is not yours to cash in. An ordinary company can be sold and the proceeds go to the shareholders. A CIC's assets can only be transferred to another asset-locked body — another CIC or a charity with a similar purpose.
If the CIC closes, what is left goes to another asset-locked body, named in the articles or chosen by the regulator.
The lock is permanent. A CIC can convert to a charity, but it cannot convert back into an ordinary limited company. If there is a realistic future in which you would want to sell the business or pass its full value to your family, a CIC is the wrong structure and it is much easier to know that now.
The dividend cap
A CIC can be limited by guarantee, which has no shareholders and pays no dividends at all, or limited by shares, which can pay dividends within a cap set by the regulator.
The cap limits how much of the CIC's profit can leave as dividends in a year, so investors can get a return while the majority of the profit stays in the community purpose. Anyone considering share investment into a CIC should check the current position with the regulator and an accountant before agreeing terms, because the cap is the entire economics of that investment.
Most small CICs are limited by guarantee, because most of them have no outside investors to pay. If you are the founder and you are working in the business, your income comes from your salary, not from dividends.
CIC, charity, or ordinary limited company
Three structures get confused with each other, and picking wrongly is expensive to undo.
An ordinary limited company is for a business whose profits are meant to reward the people who built it. You can run it ethically, give money away, and pay staff well — nothing about a limited company stops you doing good. What it does not give you is a legally binding promise that the money stays in the purpose, and for some funders and councils that promise is the point.
A charity goes further than a CIC in every direction. Charities get tax reliefs a CIC does not — Gift Aid on donations and relief on business rates among them — and access to grant funding that only charities can apply for. In exchange, the purposes have to be charitable in law, the Charity Commission regulates you, and trustees are normally unpaid. If your income will come mainly from donations and grants, and you are not planning to draw a salary as a trustee, a charity is often the better home.
A CIC sits between them. It is quicker and lighter to set up than a charity, the purposes can be broader than charitable ones, and the people running it can be paid for doing so. What it does not have is charitable tax status — a CIC pays Corporation Tax on its profits like any other company. Where it earns its place is with businesses that mainly trade for their income and want the community lock to be real and visible.
Who a CIC actually suits
CICs work best when most of the money comes from trading rather than donations: a community café, a repair workshop, a training provider, a leisure trust, a transport scheme, a social care service that holds contracts with the council.
Three signals suggest a CIC is right for you. Your income mainly comes from selling something rather than fundraising. You want the community commitment to be legally binding, because your funders, your council or your customers care about it. And you are content that you will never sell the business and keep the proceeds.
Two signals suggest it is not. You want the option to build something and sell it. Or your income will be almost entirely grants and donations, in which case look hard at charitable status first.
How a CIC gets set up
A CIC is formed at Companies House like any company, with the community interest statement submitted alongside the application and passed to the CIC Regulator for approval. You need the usual company ingredients — an available name, at least one director, a registered address — plus articles of association that contain the asset lock, and the fee (standard online incorporation is £100). Being a director of a CIC carries the same legal duties as any other company directorship, set out in GOV.UK's guide to being a company director.
Two honest notes about where this site can and cannot help. Plan's setup step covers sole trader and limited company, so CIC formation happens outside it, through the regulator's process and Companies House. And a solicitor or a specialist CIC adviser is worth using on the articles, because the asset lock wording is what makes the structure permanent.
What this looks like in practice
Take Marcus, who runs a community bike workshop in Leeds. He fixes and sells refurbished bikes, and he runs paid repair classes for residents of two housing estates. An average repair brings in £25 and he does about 60 a month, which is £1,500 of sales, and the council pays him £1,200 a month to run the training sessions.
So around £2,700 a month comes in. Parts, tools, the rent on the unit, insurance and his own wage come out of it, and whatever is left stays in the workshop — more stock, a second bench, an apprentice. The CIC structure is what lets him say to the council, in a way that is legally true rather than just sincere, that the money is not going anywhere else. It is also why he will never sell the workshop and keep the proceeds, and he decided that was a price worth paying before he applied.
The numbers still have to work. A community purpose does not pay the rent, and a CIC that cannot cover its costs helps nobody. Funders and councils will ask to see the plan behind the purpose.
Create a mini business plan in minutes with Plan.business. Put in your prices, your hours and your costs, and it works out the rest — what you will make month by month, when you break even, and what you need to charge to cover the work.
Figures correct as of September 2026. Tax thresholds, fees and rates change; check the linked GOV.UK pages before acting. Prices and costs shown are indicative and vary by area and by what's included.
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Frequently asked questions
What is a community interest company? A CIC is a limited company that exists to benefit a community rather than to enrich its owners. It trades, employs people and pays Corporation Tax like any company, but its assets and most of its profits are locked to its community purpose by law, and it is overseen by the CIC Regulator.
Can a CIC make a profit and pay its directors? Yes to both. A CIC can run at a profit, and directors can be paid a salary for the work they do — that is one of the main differences from a charity. What the profit cannot do is leave the company for private benefit, beyond a capped dividend where the CIC is limited by shares.
What is the asset lock? It is the rule that keeps a CIC's money and property inside its community purpose. Assets cannot be transferred out at less than market value for private benefit, the business cannot be sold with the proceeds going to the owners, and anything left on closure passes to another asset-locked body.
Is a CIC better than a charity? Neither is better in general. A charity gets tax reliefs and access to grants a CIC does not, but has stricter purposes, Charity Commission oversight and usually unpaid trustees. A CIC is quicker to set up, allows paid directors and broader purposes, and pays Corporation Tax normally.
How do you set up a CIC? You apply through Companies House with a community interest statement that the CIC Regulator must approve, along with articles containing the asset lock, a director, a registered address and the fee. Each year you file accounts, a confirmation statement and a CIC report describing what you did for your community.
Two ways to do this
Get the numbers straight first, free. Whatever structure you land on, the plan underneath it is the same job: what you charge, what it costs, what the year looks like month by month. Plan does that with you one short question at a time, in your browser, and exports it as a spreadsheet you can send to a funder or an accountant.
Or go straight to the CIC process. Forming a CIC runs through the CIC Regulator and Companies House rather than through Plan. Start with GOV.UK's community interest company guidance, and use a solicitor or a specialist CIC adviser for the articles and the asset lock.