Establishing your church: legal steps, charity status, and governance explained
“Help! When are we a church?”
A great question! Many Christians believe in the “ecclesia” meaning of a church – a gathering of God’s people rather than the bricks and mortar of a church building. You might have started meeting together unofficially in someone’s house, or as a branch of an international or overseas organisation operating in the UK. Or perhaps you’re considering a church plant from an established church and your minds have turned to next steps.
When do you become a legally independent church body? What steps do you need to take to make that happen? Helping new churches set out with a firm legal foundation is one of our great joys at ECS, so here are some answers to the most commonly asked questions:
Are we already a charity?
A charity is an organisation that has charitable purposes and operates for public benefit, including furthering the Christian faith in a publicly accessible way. Churches are nearly always automatically charities – even if they haven’t planned to be! If you have any assets like cash in a bank account or a lease for premises, chances are that you already fall within the legal definition of being a charity. The question is what you do about it.
Do we have to be registered with the Charity Commission to be a charity?
No, you don’t need to be registered with the Charity Commission to be a charity. But we understand this might be confusing. Many churches are not listed on the Register of Charities, but this doesn’t mean they aren’t charities.
The reason is that historically, churches haven’t legally been required to register with the Charity Commission if they’re affiliated to certain denominational or umbrella bodies. However, they still exist as charities and are regulated by the Charity Commission. They are known as “excepted charities” because they are ‘excepted’ from the requirement to register.
The law has changed so these churches will need to register by March 2031 if they haven’t done so already. In the future, if you’re a church with an income of £5,000 or more per year, we expect you’ll be legally required to register with the Charity Commission.
What do we have to do?
To become an independent, legally compliant charity, it depends on how far along your church is in thinking through some ‘big picture’ questions. If you’ve started meeting together, you might want to begin holding church services that are open to the public. Often, this is the point where more decisions need to be made, but the earlier you think about these questions, the better.
Key considerations:
1. Governance
A charity will need to think about how it defines itself and operates in practice. Those issues are set out in a constitution or some other kind of governing document. As well as your charitable purposes and statement of faith, you’ll need to think about how you’ll make decisions, who will lead you and what kind of membership structure you plan to have. There are different models and forms of legal structures you can choose from and we’re happy to chat through the options with you. We often recommend churches choose a Charitable Incorporated Organisation (CIO) as their legal structure.
2. Decision making
Charity trustees are those people who have control of the management and administration of the charity. We recommend a church has at least three trustees. These might also be the spiritual leaders of the church, or include the spiritual leaders alongside others who have relevant gifts, such as finance or administration (see this article for further guidance on this area). The responsibilities of charity trustees under charity law are largely common sense, but it is important to be aware of them. They are explained in the Charity Commission’s guidance CC3: The Essential Trustee.
3. Funding
If members are beginning to contribute to the church’s expenses these will be considered charitable funds. As such:
- You will need to set up an independent bank account. It is often a pre-requisite of banks that you are already a legally established charity. If you set up as a CIO, you’ll be legally established when the CIO is registered by the Charity Commission. For other legal structures it varies, but a bank will usually want a copy of the governing document you’ve formally adopted and details of your trustees (as a minimum).
- There are requirements for you to keep records of your charitable funds and this may mean keeping proper accounts that can be independently verified.
- Unless your legal structure is a CIO, once your income is over £5,000 each year you must be registered with the Charity Commission (although, as we’ve noted above, there is a temporary exception for some churches).
- You can register with HMRC and claim Gift Aid on donations from individuals.
4. Meeting place
If you’re meeting in a public building you’ll need an agreement for using the premises. There’ll be other considerations such as public liability insurance, safeguarding for children and vulnerable adults, data protection and music licensing. A legal entity like a CIO can enter those agreements and limit the personal liability of the trustees (see our CIO factsheet for further information).
What information do we need to file with the Charity Commission?
The required information will depend on whether you’re a registered charity, your legal structure, and your annual income. You have a legal obligation to keep your Register of Charities entry up to date and you can file changes online; for example, if you appoint a new trustee or make changes to your governing document. Whether or not you’re a registered charity, you need to keep certain financial records (see our article here for further information).
How much will it cost?
This is a difficult question to answer. If the church decides to register as a CIO, the next step is to read our CIO Booklet which you can download here.
A general estimate is that legal fees are likely to be in the region of £2,000 – £3,000 plus VAT to establish a new church, or £3,000 – £5,000 plus VAT to incorporate an existing church that doesn’t own any property. Property ownership is often a complicating factor which will mean that legal fees are higher.
How long will it take?
Establishing a new church can take only a few months if you’ve already considered the main governance and trustee implications. Setting up a CIO requires registration with the Charity Commission regardless of your income, and this can take an additional 8-12 weeks. For more details take a look at our CIO Booklet.
Access Christ-centred legal expertise
We understand these matters can be complex and confusing. You want to get things right, but there are so many questions, and so many competing demands.
That’s why we’re here – to help you navigate legal complexity with Christ-centred legal expertise. Freeing you up to focus on your mission, and setting your ministry on a firm legal footing.
Speak to us today if you want to discuss any of the issues raised above.
Banner photo by Small Group Network on Unsplash
