Many smaller churches do not currently need to register with the Charity Commission. But this is soon going to change. The Charity Commission has indicated that from March 2021, all churches with an income of over £5,000 per annum will need to register, whether or not they are affiliated to the FIEC or another umbrella body. Churches that are not currently registered will need to think about what steps they should be taking to ensure they are ready to register from March 2021 onwards.

Requirements for Registration with the Charity Commission

Under s.30 of the Charities Act 2011, all charities whose gross income is more than £5,000 must register with the Charity Commission unless they are an exempt charity or fall within an exception.

Excepted Charities under the Charities Act and Regulations

An ‘excepted’ charity does not have to register with the Charity Commission or submit annual returns and accounts. But excepted charities must still comply with charity law and their trustees have the same duties and responsibilities as trustees of any other charity. The Charity Commission regulates them in the same way as registered charities and can use any of its powers if it needs to.

Under the Charities (Exception from Registration) Regulations 1996, a church is currently excepted from registration if its income is £100,000 or less, it is not a Charitable Incorporated Organisation (“CIO”), and it is connected with any of the following bodies:

1. Baptist churches including:

  • Association of Grace Baptist Churches East Anglia
  • Association of Grace Baptist Churches South East
  • Association of Grace Baptist Churches West Anglia
  • Baptist Union of Great Britain
  • Baptist Union of Wales
  • Gospel Standard Trust
  • Grace Baptist Trust Corporation
  • Old Baptist Union

2. A church which is affiliated to the Fellowship of Independent Evangelical Churches (“FIEC”)

3. Congregational churches including:

  • Congregational Federation
  • Evangelical Fellowship of Congregational Churches

4. Union of Welsh Independents

5. A church which is a member of the General Assembly of Unitarian and Free Christian Churches

6. The Calvinistic Methodist or Presbyterian Church of Wales

7. The Church of England

8. The Church in Wales

9. The Methodist Church

10. The Religious Society of Friends

11. The United Reformed Church

The exception for church charities was originally only intended to run until 2001, but this has been extended several times to give the Charity Commission and umbrella bodies time to help churches prepare for registration.

The Excepting Regulations are due to expire on 31 March 2021.

What if you are not an excepted church?

The following groups of churches used to be excepted, but were not included in the 1996 Excepting Regulations:

1. The Church of the Nazarene

2. The Free Church of England

3. Independent Methodists

4. Wesleyan Reformed Union

5. Churches of Christ

Any church with income over £5,000 belonging to one of these groups (and indeed any other church that is not affiliated to one of the “excepting” umbrella bodies) that is not currently registered should already have registered with the Charity Commission.

What do you need to consider before the end of March 2021?

It is likely that all churches which are currently excepted under the Excepting Regulations will need to register with the Commission after March 2021. Although there may be a phased registration process, it is advisable for churches to start to consider certain issues now:

(a) Is the church’s income above the threshold of £5,000? If not, then there will not be a requirement to register. In all other cases, further questions should be considered.

(b) Are the church’s constitutional documents up to date and appropriate to meet charity law requirements? In particular, churches will need to demonstrate that they are compliant with rules about the payment of trustees (including a pastor or lead elder) and dealing with conflicts of interest. We can assist with reviewing and amending your constitution as necessary.

(c) Do you have a sufficient number of trustees? It will usually be necessary to have at least three trustees as a minimum, and more if any of the trustees are “connected” i.e. related to each other or financially inter-dependent in some way, especially if one or more of them is also paid. See the separate article on Trustees, Spiritual Leaders and decision-making.

(d) Should the church consider incorporating as a Charitable Incorporated Organisation (“CIO”)? Some types of excepted charity may be unable to convert to a CIO, so you will need to take legal advice on this.

Incorporating as a Charitable Incorporated Organisation (“CIO”)?

If an excepted church charity incorporates as a CIO, it will no longer be excepted and must register with the Charity Commission (this is because under the provisions of the Charity Act, a CIO can only exist when it is registered by the Charity Commission).

In most cases, incorporating the church as a CIO would involve setting up a new CIO and then transferring the assets and operations of the current excepted charity to the CIO. In some cases this may be straightforward, but others could be more complicated depending on issues such as what property the church uses and whether there are restrictions in the church’s current constitutional provisions. See our separate booklet on Charitable Incorporated Organisations for more details.

Do get in touch if you would like further information on registration requirements, constitutional amendments or the process of incorporating a CIO and what could be involved for your church.

This information has been provided by solicitors working for Edward Connor Solicitors. It is designed for the purpose of knowledge sharing only and does not constitute legal advice.

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