You’ve worked hard to set up your Community Interest Company. You’ve secured funding, started delivering services, and your organisation is beginning to make a real difference.
Now you’re facing a question that almost every CIC director asks at some point:
“Can I finally pay myself… or would that breach the asset lock?”
It’s a perfectly reasonable question—and one that causes a surprising amount of confusion.
Some directors avoid taking a salary because they’ve been told the asset lock means they must work for free. Others start paying themselves without understanding the rules, assuming that because they manage the company, they can simply transfer money from the business account.
Both approaches can create problems.
The good news is that the asset lock does not stop CIC directors from receiving a salary for genuine work. Its purpose is to protect your company’s assets so they continue to benefit the community—not to prevent directors from being paid fairly.
The challenge is understanding where the line is.
How much can you pay yourself? Does it have to go through PAYE? Could excessive remuneration raise governance concerns? What does the CIC Regulator expect? And how do you make sure your decisions stand up to scrutiny from HMRC, funders, or other stakeholders?
In this guide, we’ll answer those questions in plain English. You’ll learn how the asset lock really works, how CIC directors can legally pay themselves, why PAYE payroll is usually the safest approach, and the practical steps you can take to stay compliant while continuing to focus on your community mission.
Quick Answer
If you’re looking for a quick answer, here it is.
Yes, you can usually pay yourself as a CIC director without breaching the asset lock.
However, there are some important principles to understand before taking a salary.
- The asset lock does not prevent directors from receiving reasonable remuneration.
- Directors should only be paid for genuine work carried out on behalf of the CIC.
- In many cases, directors are paid through PAYE payroll.
- Remuneration decisions should be properly authorised, documented, and transparent.
- Good governance helps demonstrate that payments support—not undermine—the CIC’s community purpose.
The asset lock protects the organisation’s assets for community benefit. It is not a rule that requires directors to work without pay.
Contents
- What Is the CIC Asset Lock?
- Does the Asset Lock Stop Directors Being Paid?
- How Can CIC Directors Pay Themselves?
- Why PAYE Payroll Is Usually the Right Approach
- Why Directors Should Think Carefully Before Invoicing Their CIC
- Before You Pay Yourself: A Practical Checklist
- Common Mistakes CIC Directors Make
- Frequently Asked Questions
- Why CIC Directors Choose KG Accountants
- How We Can Help
What Is the CIC Asset Lock?
The asset lock is one of the defining features of a Community Interest Company—and also one of the most misunderstood.
Many directors assume it means they cannot receive a salary.
It doesn’t.
The purpose of the asset lock is to ensure that the CIC’s assets continue to be used primarily for community benefit rather than being distributed for inappropriate private gain.
It protects the organisation’s long-term mission by helping to ensure that money, property, and other assets remain focused on delivering public benefit.
It is not designed to stop a CIC paying legitimate business costs, including reasonable remuneration for directors carrying out genuine work.
Does the Asset Lock Stop CIC Directors Being Paid?
No.
A CIC can pay its directors for genuine work performed on behalf of the organisation.
Many directors are responsible for:
- Managing employees and volunteers
- Delivering projects
- Preparing funding applications
- Overseeing finances
- Ensuring legal compliance
- Developing strategy
- Representing the organisation
These responsibilities require significant time and expertise.
Receiving payment for carrying out those duties is entirely different from distributing the CIC’s assets for private benefit.
The important question is not:
“Can I pay myself?”
Instead ask:
“Can I justify this remuneration as reasonable, properly authorised, transparent, and in the best interests of the CIC?”
How Can CIC Directors Pay Themselves?
Salary Through PAYE
For most working directors, the usual method is through PAYE payroll.
PAYE provides:
- Accurate payroll records
- Proper tax reporting
- Income Tax and National Insurance administration
- Transparency
- A clear audit trail
It also demonstrates good governance and helps reassure funders, auditors and stakeholders that director remuneration is being managed appropriately.
Director Expenses
Salary is different from expenses.
Directors can usually reclaim legitimate business expenses incurred while carrying out their duties.
Examples include:
- Business travel
- Office supplies
- Training
- Professional subscriptions
- Business accommodation
Expenses should always be:
- Supported by receipts
- Recorded accurately
- Approved where appropriate
- Kept separate from salary
Why PAYE Payroll Is Usually the Right Approach
Many new directors ask:
“Why can’t I simply transfer money from the business account?”
The answer is simple.
Payroll creates accountability.
Every salary payment is:
- Recorded correctly
- Reported to HMRC
- Reflected in the accounts
- Supported by payroll records
For Community Interest Companies, transparency matters.
Using PAYE demonstrates that remuneration is being managed professionally and consistently.
Why Directors Should Think Carefully Before Invoicing Their Own CIC
Some directors consider invoicing the CIC instead of using payroll.
Although this may appear simpler, directors should remember that HMRC considers the actual working relationship, not simply what an invoice says.
A director who:
- Controls the organisation
- Makes strategic decisions
- Works continuously for the CIC
- Oversees day-to-day management
may not be operating as an independent contractor.
This is where employment status and the off-payroll working (IR35) rules become relevant.
Rather than trying to avoid payroll, many CICs choose the more straightforward and transparent option of paying directors through PAYE.
Before You Pay Yourself: A Practical Checklist
Before paying yourself, ask:
✅ Have remuneration decisions been properly approved?
✅ Has payroll been established where appropriate?
✅ Is the remuneration reasonable?
✅ Are expenses being kept separate?
✅ Are records complete?
✅ Does the decision support the CIC’s community purpose?
If the answer to all of these questions is yes, you’re already following many of the principles of good governance.
Common Mistakes CIC Directors Make
The mistakes we see most often include:
Believing the Asset Lock Prevents Salaries
It doesn’t.
The asset lock protects community assets—not directors from receiving reasonable remuneration.
Paying Yourself Informally
Taking money directly from the business account without proper payroll or documentation creates unnecessary accounting and governance issues.
Mixing Expenses and Salary
Expenses reimburse costs.
Salary pays you for your work.
They should never be confused.
Assuming a CIC Is the Same as a Normal Limited Company
A CIC has additional governance responsibilities because it exists to benefit the community.
Director remuneration should always reflect that wider purpose.
Poor Documentation
Even appropriate remuneration becomes difficult to justify if there are no board minutes or supporting records.
Waiting Too Long to Get Advice
Correcting payroll and governance mistakes is usually much more difficult than getting things right from the beginning.
Frequently Asked Questions
Can a CIC director receive a salary?
Yes. Directors can usually receive reasonable remuneration for genuine work carried out for the CIC.
Does the asset lock stop directors from being paid?
No. The asset lock protects the CIC’s assets for community benefit. It does not prohibit reasonable salaries.
What is reasonable remuneration?
There is no fixed amount.
Remuneration should be proportionate to the work performed, responsibilities undertaken, and the financial position of the CIC.
Should directors use PAYE?
For many working directors, PAYE payroll is the usual and most transparent way of receiving a salary.
Can directors invoice the CIC instead?
This depends on the circumstances. Directors should carefully consider employment status and off-payroll working rules before treating themselves as self-employed.
Can directors claim expenses?
Yes, legitimate business expenses can usually be reimbursed provided they are properly documented.
Does director remuneration need to be recorded?
Yes. Good governance relies on accurate payroll records, accounting records, and appropriate approval of remuneration decisions.
Why CIC Directors Choose KG Accountants
Community Interest Companies have unique compliance requirements.
At KG Accountants, we specialise in helping CIC directors:
- Set up PAYE payroll correctly.
- Structure director remuneration.
- Understand the asset lock.
- Meet HMRC payroll obligations.
- Maintain strong governance.
- Prepare annual accounts and Corporation Tax returns.
- Stay compliant as the organisation grows.
With more than 100 years of combined experience supporting Community Interest Companies, we understand the practical challenges directors face and provide straightforward advice that helps you stay focused on delivering community impact.
Final Thoughts
The asset lock is often misunderstood.
It is not a rule that prevents CIC directors from receiving a salary.
Instead, it protects the organisation’s assets while allowing directors to receive reasonable remuneration for genuine work, provided those decisions are transparent, properly authorised, and supported by good governance.
When payroll, governance, and documentation are managed correctly, paying yourself does not have to conflict with your CIC’s community purpose.
How We Can Help
Whether you’re paying yourself for the first time, reviewing your payroll arrangements, or simply want reassurance that your CIC is operating correctly, our specialist team is here to help.
We’ll guide you through director remuneration, PAYE payroll, governance, and ongoing compliance so you can focus on growing your organisation and delivering lasting community benefit.
Call us today on Tel: 0207 078 7477 or complete our enquiry form in order to book a FREE initial consultation.
Categories: CIC Directors, Community Interest Companies, Director, Director Pay, Director Wage, Employment and related matters, Payroll
Leave a Reply