They are offered by banks and building societies and work like normal bank accounts that you can open in the name of a charity or other organisation.
This means if you look after a charity's money, you can keep it separate from your own finances.
Banks limit the types of organisations that can apply for their charity accounts, but you can usually open one for:
A registered charity
A community group, club or society
There may also be limits on how many employees your charity can have or a maximum annual turnover.
For example, a bank may only offer an account if your charity employs less than 50 people and has a turnover of less than £5 million.
You can get most of the features that come with a normal personal account. You may be able to:
Accept incoming card payments and bank transfers, e.g. donations
Make one off payments on your card, using internet banking or by cheque
Make recurring payments like direct debits and standing orders
Earn interest on your balance
Use an overdraft for short term borrowing
Keep track of your balance and spending through internet banking
You may be able to get protection on the money in your account from the Financial Services Compensation scheme (FSCS). You can check if your charity is eligible for this protection on the FSCS website.
Some charity bank accounts come with a monthly charge of around £5, but others come without a fee if you have a high enough balance in the account.
Some accounts charge fees if you use their overdraft, and some charge a set amount for transactions like paying in a cheque or paying a direct debit.
Most do not pay any at all, but some pay interest on the credit balance in your account.
If your charity holds a large amount of cash and you want to earn interest, check you will earn more than the monthly fees. If not, a free current account that pays no interest could save you money.
You may be able to get a better interest rate from a separate charity savings account.
You could deposit money the charity will keep hold of long term in a savings account and use a current account for incoming and outgoing transactions.
Charities do not have to pay tax on most of their income. When they do pay tax, it is at a lower rate than individuals or businesses.
You can get the interest on your charity account tax free by showing your bank a letter of recognition from HM Revenue & Customs, which proves you are a registered charity.
You can claim back any tax charged in error. Here is how to reclaim it and what tax charities should pay.
You can also claim an extra 25p for every pound donated to you using Gift Aid. Here is how Gift Aid works and how to claim it back online.
They are available from banks and building societies. This includes some small business bank accounts that can also be opened by charities.
You can use it to find an account that:
Offers all the features you need, like internet banking, a debit card or a nearby branch if you need to pay cash into it
Comes with monthly fees you are happy to pay
Has a high enough interest rate
Can accept your charity, e.g. your charity's turnover is less than their maximum
You need to decide who has authority to run the account, make withdrawals or sign into internet banking. You can decide:
Who will be named on the account as a signatory
How many signatories are needed to authorise a transaction
For example, you could set up four signatories on the account and specify that withdrawals can only be authorised by two or more of them. They could then only be made by cheques or internet banking transactions authorised by two different signatories.
You usually need to provide at least one of the following documents to open a charity bank account:
Your charity's registration documents
Your charity's Trust deeds
Minutes from a meeting if you run a club or association*
*These need to prove who can open an account on the charity's behalf
You may also need to prove the identity of each signatory with:
Proof of their name, like a passport or driving licence
Proof of their address, like a utility bill
It may be easiest to take the documents they need into a branch so you can get them back immediately and to avoid the risk of them being lost in the post.
New bank accounts are launched all the time, so compare all of the best options to make sure you get the right one for your circumstances.