Charitable Community Benefit Society

What is a Charitable Community Benefit Society

A society registered with the Financial Conduct Authority, owned by the members. The society is established for the benefit of the community and not of its members, who do not need to be (though they can be) consumers or workers. Each member has one vote at the AGM, even if they have more than one share. Unlike with a company, the shares are not transferable and can only ever be refunded at par (usually £1). The share can never be worth more than what was paid for them. A CBS must be established with a social or environmental objective, and has a non-profit constitution and an asset lock. The differences between a charitable CBS and a non-charitable CBS are:

  • A charitable CBS has a stronger asset lock
  • A charitable CBS has asked HMRC to recognise it as charitable and HMRC has agreed

A charitable community benefit society must only undertake activities that further its exclusively charitable objects. This means that a charitable community benefit society that intends to engage in trading activities that are neither in pursuit of its primary purpose nor ancillary to that purpose, may have to establish a trading subsidiary to carry out this trade.

A charitable CBS is not registered with the Charity Commission as it is exempt from registration. HMRC will agree to charitable recognition and the related tax advantages if the objects are charitable, the asset lock is correct and any interest paid to members is low and not dependent on the surplus generated.

In Scotland, there is no such term as the ‘exempt charity’ and therefore to be a charitable community benefit society the society must also apply to the Scottish Charity Regulator to be registered charity. To obtain tax benefits the organisation will also have to apply to HMRC. The same is true in Northern Ireland, where charitable community benefit societies must become registered charities with the Charity Commission for Northern Ireland, and apply separately to HMRC for tax benefits.


  • Non-profit aim is its main objective, and aims should be consistent with the 6 Co-operative Principles
  • Limited liability
  • Exempt from the Financial Services and Markets Act 2000, so can advertise for loan or share investment from the public (eg in a Community Share Offer)They can   issue  withdrawable shares and  benefit from exemptions to regulated activity and financial promotion prohibitions under the Financial Services and Market Act 2000.  In short, this means that societies may issue withdrawable shares to the public, without needing to comply with the restrictions on financial promotions (such restrictions make public share offers very expensive for companies to undertake).  
  • Investment reliefs (SEIS, EIS, and SITR) may be available
  • Favourable tax treatment of interest payments
  • Charity exemptions for VAT, Business Rates and Corporation Tax
  • Finally, many people are drawn to the idea of societies, because they offer a democratic structure, where membership is drawn from the community and each member has one vote, regardless of how many shares they own in the society.


  • Not listed at Companies House. This creates problems for credit reference agencies and it is often not possible to get a decent credit rating. Neither is it listed with the Charity Commission.
  • More expensive to create than a limited company (or a CIO or charitable company)
  • Must be audited if income is over £250k.
  • Preparation of accounts and trustees annual report is more complex, time consuming and expensive, due to the application of the Charities SORP.

Process for registering as a charitable community benefit society

In order to register as a society, you must submit a set of rules and application form to the Financial Conduct Authority, together with the appropriate fee.  Using model rules reduces this fee, which is payable on a sliding scale from £40 (using model rules with no amendments) to £950 (using model rules with ten or more amendments, or using bespoke rules).  If you are using model rules, the sponsor of those rules must sign the application form. We use model rules.

We would be happy to advise you on the registration of a charitable community benefit society.  Our fees to set up a charitable community benefit society and then register it with Financial Conduct Authority are  £1000 plus vat plus Financial Conduct Authority fees which vary as outlined above.

Just email or call 01925757887 or 07710141058 for more details.