Charity Status and Registration

All independent churches are charities, governed by charity law, and required to operate within the guidance published in their jurisdiction.

We often repeat that information but there is still a misunderstanding amongst many churches about charitable status and, particularly, registration.

The confusion comes from whether a charity is, or needs to be, registered and with who, and what laws and guidance apply to that charity.

Sometimes the question is asked whether a church could choose not to be a charity – usually linked to frustration with charity governance requirements. But it is important to understand that any organisation requires a legal framework to operate in – whether that be as a company, a charity, a club, or a society.

Each comes with different benefits and possible downsides but all come with regulatory requirements. Churches cannot and, in line with Romans 13:1-7, should not seek to avoid or evade regulation but should rather submit to the authorities.

So, what is a charity?

Charities are organisations which are established for charitable purposes (including the “advancement of religion”) and operate for the benefit of the public. Sharing the gospel in a publicly accessible way is, by definition, charitable!

Operating as a charity provides the legal framework for a church to function, enabling it to own or rent buildings, open a bank account, employ staff, as well as receive tax benefits such as the ability to claim Gift Aid on donations received.

Beyond the practicalities, operating as a charity which is established for the “advancement of religion” means that the trustees of the charity have a legal duty to ensure that the organisation is preaching the gospel in the area in which they work - what a privilege that is!

Charity law is a devolved matter so is slightly different in different parts of the UK, with different regulators and requirements:

• In Scotland the regulator is OSCR; all charities operating in Scotland are required to register with OSCR.
• In Northern Ireland the Charity Commission for Northern Ireland registers and regulates charities regardless of their income or size.
• In the Channel Islands, charities are required to register with The Guernsey Registry or the Jersey Charity Commissioner, to call themselves a charity and benefit from charitable tax reliefs, regardless of their size.
• In England and Wales, charities are regulated by the Charity Commission; charities with an annual income of over £5,000 per year are required to register unless they are covered by an exception (see below) or exemption.

Misunderstandings on charity registration arise particularly in England and Wales where not all charities are required to register and, most commonly, because there are four different processes which are perceived to be registration:

• Registration with the relevant charity regulator, as outlined above.
• Registration of the trust for the church building (which doesn’t cover the operating or funds of the church family).
• Registration of a building with the General Registry Office as a Place of Worship (and for marriages).
• Recognition as a charity by HMRC.

All four of these may be both relevant and important for churches but they are all separate processes and serve different purposes. Regardless of whether a church is registered in all or some of these ways, it is still a charity governed by charity law.

Churches should be clear which are required in their circumstances and seek advice where they are not sure.

Historically, churches who were affiliated to certain denominations or organisations, including FIEC, were "excepted" from the requirement to register with the Charity Commission, though they were charities and regulated by the Charity Commission.

Changes brought in by the Charities Act 2011 meant that churches which had previously been excepted from registration with an annual income of over £100,000 were now required to register, and those with an income of over £5,000 but under £100,000 remain excepted.

That exception from registration for churches, including those affiliated with FIEC, is due to end in 2031 and churches with an income over £5,000 will need to be registered with the Charity Commission by that date.