Are CICs tax exempt because they benefit the community?

No. A CIC isn't a charity, so the charity tax reliefs don't apply. It's taxed as an ordinary company regardless of its community purpose.

Can you Gift Aid a donation to a CIC?

No. Gift Aid only applies to donations to charities and CASCs recognised by HMRC. A CIC isn't a charity, so donations to it don't qualify for Gift Aid.

Can a CIC reduce its corporation tax by donating to charity?

Yes. A company donation to a charity can be deducted from the CIC's profits under the normal corporation-tax rules, provided its articles permit the gift.

Do CICs have special VAT or PAYE rules?

No. VAT, PAYE and National Insurance apply to a CIC exactly as to any company. On VAT, freely-given grants are generally outside scope, while payment for goods or services is VAT-able even if labelled a grant.

Guides

Do CICs Pay Corporation Tax? Yes — Here's How

Q: Do CICs pay corporation tax?

Yes. A CIC is liable to corporation tax as a company on its trading profits, investment income and gains. HMRC's guidance states there are no CIC-specific exemptions or reliefs.

Updated 11 Jun 2026

Yes — a community interest company pays corporation tax in the same way as any other company. HMRC's guidance is blunt about it: a CIC "is liable to Corporation Tax as a company" and "there are no CIC specific tax exemptions or reliefs available". A CIC is not a charity and doesn't get charity tax breaks just because it works for the community. It's chargeable on its trading profits, its investment income and its gains, and it gets the same normal reliefs any company gets — no more, no less.

Why doesn't a CIC get charity tax treatment?

Because in law a CIC isn't a charity, and the tax follows the legal status. The reliefs that make charities tax-efficient — exemptions on primary-purpose trading, on investment income, on gains — only apply to bodies that are charities recognised by HMRC for tax. A CIC can't be a charity, so those reliefs never come into play, however charitable the work looks.

This is the trade-off built into the CIC structure: lighter regulation and far more operating freedom than a charity, in exchange for ordinary company taxation. If charity tax reliefs matter more to you than that freedom, the question becomes whether to be a charity instead — see CIC vs charity and converting a CIC to a charity.

What does a CIC pay corporation tax on?

The normal company tax base:

Trading profits — the surplus from what the company does (though whether a particular CIC is actually "trading" is a question of fact, which matters for how some income is treated).
Investment income — interest, rent and the like.
Chargeable gains — profits on selling assets.

You report it all on a Company Tax Return (CT600) to HMRC, pay the bill 9 months and 1 day after your accounting period ends, and file the return within 12 months. The CT600 deadlines page has the dates and the deadline checker works out yours.

Are grants taxable for a CIC?

This is where CIC tax gets genuinely fiddly, and where it's worth getting advice. There's no blanket answer — it depends on what the grant is for:

A grant that funds day-to-day running costs or supports the trade is normally a taxable trading receipt.
A grant for capital — buying equipment or premises — is normally not a trading receipt; it usually reduces the cost you can claim capital allowances on instead.
A grant for non-trading activity isn't taxed as trading income.
If a grant isn't clearly split, HMRC's starting point is to treat it as revenue (and so potentially taxable).

The timing matters too: under the accounting rules, grant income tied to conditions is often recognised as you meet those conditions or spend the money, not all at once when it arrives. Getting the taxable slice right — separating restricted grant funding from genuinely taxable trading surplus — is exactly the area where non-specialist accountants slip up. If your CIC runs on grants, this is worth a proper look.

Can a CIC claim Gift Aid?

No — not on money given to it. Gift Aid only works where the recipient is a charity (or community amateur sports club) recognised by HMRC for tax. A CIC isn't, so a donation to a CIC doesn't carry Gift Aid, and the CIC can't reclaim basic-rate tax on it. Donors who assume "good cause = Gift Aid" are often surprised by this.

It runs the other way, though: if your CIC gives money to a charity, that donation can reduce your CIC's own corporation tax under the normal company rules — provided your articles allow the gift in the first place (the CIC asset lock has a say in where money goes).

What about VAT and PAYE?

There's nothing CIC-specific here. VAT, PAYE and National Insurance work for a CIC exactly as they do for any company — same registration thresholds, same rules. On VAT, the usual grant question applies: money freely given with nothing supplied in return is generally outside VAT, while a payment for goods or services (even one labelled a "grant") may be VAT-able. The label on the money matters less than what, if anything, the funder gets for it.

Frequently asked questions

Are CICs tax exempt? No. A CIC pays corporation tax like any company. There's no exemption for having a community purpose.

Is a CIC the same as a charity for tax? No. A charity recognised by HMRC gets tax reliefs a CIC can't access. A CIC is taxed as an ordinary company. See CIC vs charity.

Do CICs pay corporation tax on grants? It depends what the grant is for. Grants funding running costs or trade are usually taxable; capital grants and grants for non-trading activity usually aren't. The treatment is nuanced — worth checking grant by grant.

Can people Gift Aid donations to a CIC? No. Gift Aid only applies to donations to charities (and CASCs) recognised by HMRC. A CIC isn't one, so donations to it don't qualify.

Can a CIC reduce its tax by donating to charity? Yes — a company donation to charity can be deducted from profits under the normal corporation-tax rules, as long as the CIC's articles permit the gift.

Do CICs file a Company Tax Return? Yes — a CT600 to HMRC every accounting period, because a CIC pays corporation tax. That's separate from the accounts and CIC34 it files at Companies House — see CIC accounts.

CIC tax — especially the grant treatment — is easy to get wrong and costly to get wrong. See how we handle it →