UK Company Limited by Guarantee (CLG)
The ideal legal structure for charities, non-profit organisations, trade associations, clubs, and social enterprises in the UK — members guarantee a nominal amount rather than holding shares.
No Share Capital Required
A CLG has no shareholders and no share capital. Members provide a nominal guarantee (typically £1–£10) instead of buying shares.
Charitable Status Ready
A CLG registered with Companies House can apply to the Charity Commission for full charitable status, unlocking Gift Aid and tax exemptions.
Limited Liability
Members' liability is limited to the amount of their guarantee — typically £1. Personal assets are fully protected.
Who is this for?
A Company Limited by Guarantee is the standard legal structure for organisations that operate for a purpose rather than profit. It provides legal personality and limited liability without issuing shares.
Ideal Profiles:
- Charities & Charitable Foundations (registered with the Charity Commission)
- Trade Associations & Professional Bodies
- Sports Clubs & Community Organisations
- Social Enterprises & Not-for-Profit Organisations
- Academic, Cultural & Arts Organisations
Not Suitable If:
- You intend to distribute profits to members → Use a Private Ltd instead
- You need to issue shares or raise equity → Use a Ltd or PLC
- You are a solo trader or consultant → Use Sole Trader or Ltd
Formation Requirements
- Minimum Members: At least one member (individual or corporate body). No maximum limit.
- Guarantee Amount: Each member guarantees a nominal amount (usually £1) in the event of winding up.
- Registered Office: A UK address in England, Wales, Scotland, or Northern Ireland.
- Articles of Association: Must clearly state the CLG purpose and that no profits will be distributed to members.
The Roadmap to Launch
Most Companies House online incorporations are processed within 24 hours, subject to review. Additional time may be required for charity registration, banking arrangements, or regulatory approvals.
Define Purpose & Draft Articles
Agree on the CLG’s objectives and name. Draft bespoke Articles of Association that state the non-profit purpose and include a non-distribution clause — surplus reinvested, not paid to members. This is the legal constitution of the CLG.
Confirm Members & Directors
Appoint at least one director (any nationality). Confirm founding members and guarantee amounts. No residency requirement.
File Form IN01 (CLG)
Submit Form IN01 online to Companies House (applicable government filing fee applies). Select “Limited by Guarantee” as company type. Most online applications are processed within 24 hours, subject to review.
Certificate of Incorporation
Receive your Certificate of Incorporation and unique Company Registration Number (CRN) confirming CLG status.
HMRC Registration
Notify HMRC to register for Corporation Tax within 3 months of starting to trade. CLGs with exclusively charitable purposes may qualify for tax exemptions under the Charities Act 2011 — subject to prevailing HMRC guidance.
Charity Commission Registration
If the CLG has exclusively charitable purposes and income exceeds the applicable threshold (currently £5,000/year), apply to the Charity Commission for England & Wales (or OSCR in Scotland / CCNI in Northern Ireland). Charitable status unlocks Gift Aid eligibility and mandatory business rate relief.
Banking & Financial Controls
Open a UK corporate or charity bank account and establish internal financial controls. Register for VAT with HMRC if taxable turnover exceeds the current threshold. If employing staff, register as a PAYE employer and set up auto-enrolment workplace pensions where applicable.
Ongoing Compliance
File an annual Confirmation Statement and Annual Accounts with Companies House (current government filing fees apply). Charitable CLGs must also submit annual returns to the relevant Charity Commission. Retain accounting records for a minimum of 6 years.
Company Limited by Guarantee vs. Other Structures
| Feature | CLG (Non-Profit / Charity) | Private Ltd (For-Profit) |
|---|---|---|
| Governing Legislation | Companies Act 2006 + Charities Act 2011 | Companies Act 2006 |
| Ownership / Members | Members (Guarantors) — no shares issued | Shareholders — hold shares |
| Profit Distribution | None — surplus reinvested in objectives | Dividends paid to shareholders |
| Member Liability | Guarantee amount only (typically £1) | Limited to value of shares held |
| Tax Treatment | Tax-exempt on charitable activities (if registered charity, subject to HMRC guidance) | Corporation Tax on profits, subject to prevailing UK tax legislation |
| Charitable Status | Can register with Charity Commission → Gift Aid eligible | Not eligible for charitable status |
Frequently Asked Questions
Do CLG members receive profits?
No. A CLG cannot distribute profits or assets to its members. Any surplus must be reinvested into the organisation’s stated objectives.
Do I need a UK address?
Yes. A registered office address in England, Wales, Scotland, or Northern Ireland is mandatory. A virtual office address is acceptable.
Can a CLG apply for charitable status?
Yes. Under the Charities Act 2011, if the CLG has exclusively charitable purposes and annual income exceeds the applicable registration threshold (currently £5,000), it must register with the relevant Charity Commission. Charitable status unlocks Gift Aid, mandatory business rate relief of at least 80%, and full or partial tax exemptions — subject to HMRC approval.
What are the annual compliance obligations?
Every CLG must file an annual Confirmation Statement and Annual Accounts with Companies House (current government filing fees apply). Charitable CLGs must also submit annual reports and accounts to the relevant Charity Commission. All CLGs must retain accounting records for at least 6 years.