Conversion turns your charitable company into a charitable incorporated organisation without creating a new charity. No assets change hands, and the charity is not wound up. It keeps its charity number, its name and usually its bank accounts. You apply to the Charity Commission, and once it is satisfied, it registers the CIO and asks Companies House to remove the company from the register of companies.
This route has only existed since January 2018, phased in through that year by income band, which is why the older position is still widely held. Before then, a charitable company wanting to become a CIO had to set up a new one, move everything across and wind up the original. That remains the position for unincorporated charities, which have no conversion route and still have to register, transfer and close.
If the structure question sits alongside other things your board is working through, you can book a free clarity call.
What conversion actually is, and what it is not
The charity does not move. It takes a new legal form and remains the same entity throughout.
That has consequences, and it’s important to spell them out. Contracts continue. Legacies written in favour of the charitable company should reach the CIO. Employment contracts continue too, because the employer has not changed. No fresh data protection consents are needed. The accounts carry on from the last set the company filed, with no merger accounting and no going concern disclosure, because there is one entity from start to finish.
Charities with staff should still take employment advice before applying. The practical position turns on how individual contracts and pension arrangements are worded, and that is worth checking rather than assuming.
The unincorporated route is worth understanding by contrast, because it is where most of the difficulty sits. A trust or unincorporated association becoming a CIO has to move assets across with a vesting declaration, deal with any permanent endowment, designated land or special trusts, and register the merger if future legacies are to be protected. TUPE applies there, because a transfer genuinely takes place.
Community interest companies can use the same statutory route. The considerations differ, particularly around the asset lock and the change of regulator, so take advice specific to that position.
Why charities are looking at this now
Two things have shifted.
Companies House is becoming a more demanding regulator. Identity verification for directors and people with significant control became mandatory in November 2025, and enforcement against unverified individuals is now under way. From spring 2026, the range of people permitted to file documents on a company’s behalf narrows. Companies have had to keep an appropriate registered office address and a registered email since March 2024, and filing fees rose in February 2026. No single item here is heavy. The accumulation is the point, and a CIO carries none of it, because it answers to one regulator.
One caveat on that, since it circulates widely. You may have read that companies will soon have to file accounts using commercial software. That reform was scheduled for April 2027 and has been put back. Companies House has it under review and has promised at least 21 months’ notice, so it is not a reason to act this year.
The second shift is on the accounting side, and it is the more concrete of the two. A charitable company must always prepare accruals accounts and apply the Charities SORP, at any income level. A CIO below the threshold can use the simpler receipts and payments basis. That threshold rises from £250,000 to £500,000 for financial years ending on or after 30 September 2026. A charity sitting between those two figures could convert and leave SORP accounting behind altogether.
Worth being even-handed about that. Receipts and payments accounts tell a reader less, and some funders prefer accruals. Moving to the simpler basis saves work and costs you something in what you can show. The charity accounting guide covers the difference.
One timing point sits behind this. Converting part-way through a financial year still brings the charity under the Charities Act accounting rules for that whole year, so it is worth deciding where in the cycle to apply rather than assuming the year-end can be settled afterwards.
What carries over, and what needs checking first
Most things carry over. Your charity number stays. Your name generally stays, though a CIO cannot use “limited” in its title. Bank accounts usually continue, though practice varies between banks and it is worth asking yours early. Grant agreements and contracts normally pass across, though a cautious counterparty may want written confirmation.
Three things need checking before you commit, and each can stop the process on its own.
Borrowing comes first. If your charity has a loan or a mortgage, conversion may count as an event of default, or your lender may want the documents renegotiated and re-executed. Speak to them before you start. A board that discovers halfway through that its lender will not lend to a CIO has a problem with no quick answer.
Pensions come next. Where there is a defined benefit scheme in deficit, conversion may trigger an employer debt. The sums can be large enough to settle the question on their own, and this needs specialist advice rather than a view from the board.
Land is the third. Registered property has to be updated at the Land Registry after conversion. Simple in principle, worth professional help given what is usually at stake.
Boards rarely arrive at this question in isolation. Conversion tends to surface when something else is already under review: the filing burden has outgrown the people doing it, or the governing document no longer matches how the charity runs. If that sounds familiar, a free 30-minute clarity call is a sensible place to start.
What stops an application
The Commission will not take an application forward while certain things are outstanding, and most of them are avoidable.
Being behind on filing is the common one. The company has to be up to date with both regulators – accounts and confirmation statements at Companies House, annual return and accounts at the Commission, and any changes to registered details.
Not being registered is the one people miss. The conversion route is open to registered charitable companies. A charitable company with income under £5,000 has no obligation to register as a charity, and plenty have not. Those have to register with the Commission first, then convert. Two applications, in that order. Exempt charities cannot use the route at all.
The members’ resolutions have to carry the company number, and applications are rejected for the want of it. The sequence runs: trustees decide to convert and adopt the proposed constitution, then members pass two resolutions – the first a special resolution or a unanimous written one, the second adopting the constitution.
Trustee eligibility is checked as well. A director disqualified from acting as a charity trustee is a ground for refusing the application, and the application requires a declaration on the point, so confirm it before you submit rather than after.
The Commission makes its own enquiries with Companies House. It will not proceed where the company is being dissolved, is in liquidation or administrative receivership, or has active legal proceedings against it. If the proposed CIO name contains a sensitive word, Companies House has to approve that before the Commission can authorise the conversion.
Smaller checks sit behind those. Any shares the company has issued, which is rare, must be fully paid. Where members’ liability on winding up exceeds £10, the CIO has to match or better it; at £10 or under it falls away on conversion.
The constitution, and where the cost really sits
This is the part that takes the time and the money.
You have to use one of the Commission’s model CIO constitutions or an approved alternative, and stay as close to the model as you can. Where you depart from it, the application has to show each change and explain it. That reads as a formality. In practice it is the step most likely to send an application back, and it is where legal fees land.
One problem catches a particular kind of charity. The model constitutions do not permit the employment of trustees or connected persons. A charity that pays someone on its board – a founder in a staff role, a minister, a practitioner – cannot adopt the model as it stands and carry on as before.
There is also an ordering rule that surprises boards. Changes to your objects, your trustee benefit provisions or your dissolution clause cannot be made as part of the conversion. They are regulated alterations, and they need the Commission’s consent separately and beforehand.
Picture a board that decides in March to convert, and to widen its trustee payment clause while it has the governing document open. It submits one application covering both. The application comes back. The board now needs consent for the alteration, then a fresh conversion application, and the timeline it gave its funders has gone.
When conversion is the wrong move
Two situations argue for staying as a company.
Borrowing against assets is the clearer one. Companies keep a register of charges at Companies House. CIOs have no public equivalent, and lenders are more cautious as a result, particularly where a floating charge is involved. A charity expecting to borrow may find the company form easier to finance.
Working internationally is the other. The CIO exists only in England and Wales, and overseas funders, partners and regulators often do not recognise it. Where the company form opens doors abroad, that recognition may be worth the extra filing at home.
Past those two, the question is whether the administrative saving justifies the cost and the disruption. For a charity with simple affairs, no borrowing and no unusual clauses, conversion is a contained piece of work with a lasting benefit. For a charity with a mortgage, a pension scheme and a bespoke governing document, it is a project, and it should be planned as one.
This article is general information for UK charities and not advice on any specific situation. Conversion involves company law, charity law and often employment and pensions law at the same time. Take proper legal advice before you commit, particularly where there is borrowing, a pension scheme or property involved.
If the structure question is part of a wider look at how your charity is run, our charity governance support covers it alongside the rest.
