Comparison · Business Structure · 2026
CIC vs Limited Company UK 2026: Asset Lock, Dividend Cap and Which to Choose
A Community Interest Company (CIC) is a limited company with a statutory community purpose, an asset lock protecting its assets, and a cap on dividends it can pay out. A standard limited company has none of these restrictions but also gains none of the trust or grant-eligibility advantages that come with CIC status. Here is how they compare for 2026/27.
TL;DR - 30-Second Summary
- - CIC: asset-locked, dividend-capped, community purpose required, easier access to social investment and some grants
- - Limited company: no restrictions on assets or dividends, full flexibility, but less credibility for grant funders focused on social impact
- - Both: pay Corporation Tax the same way — neither gets automatic charitable tax relief
Side by Side: CIC vs Limited Company
| Feature | CIC | Limited Company |
|---|---|---|
| Asset lock | Yes — statutory, assets must serve community purpose | None |
| Dividend cap | Max 35% of distributable profit (aggregate cap) | No cap |
| Corporation Tax | 19%-25% (same rates as any company) | 19%-25% |
| Regulator | CIC Regulator + Companies House | Companies House only |
| Community interest statement required | Yes — must pass the community interest test | No |
| Grant/social investment eligibility | Often preferred by social funders | Usually excluded from social-purpose funds |
| Conversion flexibility | Cannot easily revert to standard company | Full flexibility to restructure |
What Is a CIC?
A Community Interest Company is a limited company (by shares or by guarantee) created specifically for social enterprises — businesses that trade for a defined community benefit rather than purely for private profit. Introduced by the Companies (Audit, Investigations and Community Enterprise) Act 2004, CICs must pass a "community interest test" on formation and file an annual community interest report alongside standard accounts.
The defining feature is the asset lock: on dissolution or sale, the CIC's remaining assets must go to another asset-locked body, not to shareholders. This gives funders and the public confidence that the organisation's resources will always serve its stated purpose.
What Is a Standard Limited Company?
A standard private limited company has no restriction on how it uses assets or distributes profit. Directors and shareholders can extract all post-tax profit as dividends, and on winding up, any surplus assets go to shareholders. This gives maximum commercial flexibility but no special standing with social-purpose funders.
Tax Treatment
Both structures pay Corporation Tax identically — 19% on profits up to £50,000, tapering through marginal relief to 25% on profits above £250,000 in 2026/27. Becoming a CIC does not confer any Corporation Tax exemption or discount; that benefit is reserved for registered charities. A CIC also cannot claim Gift Aid on donations the way a charity can, though it can still receive grants and social investment.
Who Should Choose What?
- - Your business exists primarily to deliver a community or social benefit
- - You want to apply for grants or social investment that require an asset lock
- - You are comfortable with a permanent dividend cap
- - You want unrestricted profit distribution and full commercial flexibility
- - Your business is primarily commercial rather than mission-driven
- - You may want to sell the business and extract full asset value later