Guide to charitable status
What types of charitable registration are there?
There are two types:
- HMRC registration, which is to do with tax, particularly Gift Aid.
- Charities registration, which is to do with demonstrating charitable status.
HMRC registration ‘the tax one’
This registration relates to a charity’s tax affairs. Although an HMRC number can be used to demonstrate charitable status, for simplicity it is easiest to regard this registration as ‘the tax one’.
Any organisation wishing to take part in the Gift Aid scheme must first register by completing HMRC’s online application process, which can be reached via this link. Once registered, a charity is issued with an HMRC number.
HMRC registration numbers generally begin with an X for charities in England and Wales, CR for Scottish charities or CH for those in Northern Ireland.
These numbers identify a charity to HMRC and are therefore always included in Gift Aid repayment claim submissions, along with charity name.
These details are also therefore required as part of the initial set up on Fund Filer and would be required in any communications a charity makes with HMRC in connection with its tax affairs.
Charity registration ‘the status one’
This registration relates to establishing charitable status. Charities across the UK are regulated to ensure correct and proper standards of operation and to prevent misuse of the status. This is not connected with tax or Gift Aid.
Registration with a regulatory body such as the Charities Commission is a legal requirement in many cases but by no means all. There are many exceptions and exemptions and these are described below. There are more than 500,000 voluntary organisations of various types in the UK, but fewer than half are formally registered as charities.
Organisations registered with their relevant governing bodies as charities should include a reference to this on any Gift Aid envelopes used for canvassing donations. Again, the rules vary depending on where the charity is located.
England and Wales
The affairs of charities in England and Wales are governed by The Charities Commission, based in London. See this link for more information on the Commissions work. Charities fall into various broad categories as follows:
- Charities which don’t need to or cannot register
Examples include organisations with incomes under £5,000, or those which are excepted or exempt.
- Charities excepted from registration
Examples are churches and chapels of various denominations, scout and guide groups. A charity which would normally enjoy exception loses this status and must register if its income rises above £100,000 per annum.
- Charities exempt from registration
These charities cannot register and are not regulated by The Charities Commission. Examples include universities, schools, museums and galleries. Some major churches and cathedrals are charities by Act of Parliament and are also exempt from registration.
- Charities which must register
Charities not falling into any of the categories above generally need to register before they can call themselves charities. Further guidance is available from the Charities Commission: http://www.charity-commission.gov.uk
Implications for envelope wordings
Registered charities are required to indicate charitable status on stationery and any other material designed to canvass for donations, such as envelopes. Inclusion of name and registered charity number is not a legal requirement under charities legislation but would be considered good practice. Set forms of words specified by the Commission should also appear as follows:
- A registered charity
- Registered charity no. (followed by the number)
- Registered as a charity
- Registered with The Charity Commission
Further detail is available via this link about running a charity.
Bear in mind that a charity name is required for declarations on Gift Aid envelopes for these to be valid for repayment claims. Declarations must bear the name of a beneficiary. Where untitled envelopes are being used, this information should be added, either via a stamp, handwriting or running the envelopes through a desktop printer.
Charity registration information is not required on numbered and dated envelopes of the type used in boxed sets. These are being used by regular church members who are already aware of the nature of the charity they are giving to.
There are about 23,000 recognised charities in Scotland, including churches and many other types of voluntary organisation.
Scottish charitable affairs are governed by the Office for Scottish Charities Registration (OSCR), created in 2005 and based in Dundee.
In Scotland it is illegal for a charity, even a church, to describe itself as such unless it is registered with OSCR. An OSCR number is also mandatory before obtaining HMRC registration to reclaim Gift Aid and enjoy other tax benefits.
Implications for envelope wordings
OSCR requires charities to show this status on stationery such as collection envelopes. Wording should include the following:
- Name of the congregation or charity, as shown in the OSCR register
- Any other name by which the organisation is commonly known
- It’s Scottish charity number
- One of the following terms:
- Charitable body
- Registered Charity
- Charity registered in Scotland
- Scottish Charity or
- Registered Scottish Charity
There is an exception to this for envelopes distributed by a church or charity to its own members, Freewill Offering envelopes for example. In these circumstances, the above information is not required.
Care should be taken as this information will be necessary on one-off Gift Aid envelopes intended for wider distribution.
Also consult OSCR’s website www.oscr.org.uk for further information.
Northern Ireland introduced its formal system for charities registration in December 2013 via the Charities Commission for Northern Ireland.
Until the Commission was launched, charities in Northern Ireland were included in a ‘deemed list’ maintained by HMRC. Appearance on the list conferred charitable status and the right to reclaim Gift Aid.
Now the Commission has been launched, all organisations that are or could be charitable are required to register, regardless of income, size or whether it is appears on HMRC’s ‘deemed list’.
However, the Commission is managing registration in tranches and not all charities have yet been invited to register. Once an invitation is received, a charity can register. It is then bound by the Commission’s rules for charitable activity on Northern Ireland.
In Northern Ireland, evidence of charitable registration must be displayed on all stationery, including numbered and dated freewill offering envelopes.