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What Is A SIC Code & Who Needs One?

find out SIC code

In business administration, SIC codes play an important role in categorising and labelling a company’s operations. SIC codes are standardised industrial classification codes that make them universally understandable to government agencies, financial institutes and other stakeholders when they need to understand the type of work a business does.

Whether you’re a small business or manage a huge company, understanding SIC codes is important for business compliance, accurate reporting and affecting communications within the business network.

This article will equip you with all you need to know about SIC codes including the various types of codes available and how you get to know the specific one that applies to your business.

What is a SIC code?

SIC Codes can be defined as a classification system for grouping companies into categories based on their operational activities. It’s part of an information standard maintained by the UK and the European Union, and it’s a prerequisite for every registered company.

SIC stands for Standard Industrial Classification and each code is made up of five digits. These codes are organised into sections based on the industry they represent.

Here’s an example to help you understand: If your company specialises in manufacturing lifting and handling equipment then your SIC code would be 28220. This number falls in section C which represents manufacturing as a whole. Book publishing has its own section (J), and it’s assigned the code 58110.

Every limited company in the UK is required to submit a SIC code with their annual accounts. Companies House use this information to determine which sector your business falls into, and then to share this data with the public. This gives potential customers an insight into what type of business you are and how you operate.

Every limited company in the UK must submit a SIC code every year with their accounts. Companies House use this information to determine which sector your business falls into, and then they share it with the public. By sharing what sector of business you’re in, potential customers can see what type of business you are and how you operate without having to look up the company further.

With over 600 codes to choose from, there should be one that accurately describes what your business does. Companies House has a full list of codes and descriptions on their website.

When do you need a SIC code?

A SIC code will be needed when filing your annual accounts, registering for corporation tax, registering as an employer, applying for business loans and maintaining accurate business records.

  • When you file your annual accounts with Companies House, you will be required to submit a SIC code to identify which industry sector the company operates in.
  • When registering for corporation tax, you will need to submit your SIC code to HMRC so it can work out the right tax needs for the company based on its business activities.
  • When registering as an employer with HMRC, SIC codes are needed to help categorise the business in the right way for payroll and employment tax purposes.
  • When applying for business loans and finance, quite often lenders asked for SIC codes. This can help them to assess the level of risk involved in lending based on the activities of the business.
  • Having the right SIC code means that you can maintain accurate public business records. This is important for potential customers to have faith in the businesses or investors or partners.

Supplying the right SIC code is a legal requirement for limited companies when it comes to tax, corporate record keeping and regulatory processes. Failure to comply can lead to penalties from HMRC.

How do you find out your SIC code?

If you’re not sure which SIC code applies to your business, you can search for it online. The Government website has a helpful tool that allows you to search by keyword or industry sector. You should be able to find the right code quickly and easily.

If you’re still unsure which one applies, you can contact Companies House directly and they should be able to help.

Types of SIC code

SIC codes are divided into categories with each industry having its own section that is assigned a letter. The codes are then arranged within the section. Here are the sections of SIC codes used by Companies House

  • Section A – Agriculture, forestry and fishing
  • Section B – Mining and quarrying
  • Section C – Manufacturing
  • Section D – Electricity, gas, steam and air conditioning supply
  • Section E – Water supply, sewerage, waste management and remediation activities
  • Section F – Construction
  • Section G – Wholesale and retail trade; repair of motor vehicles and motorcycles
  • Section H – Transportation and storage
  • Section I – Accommodation and food service activities
  • Section J – Information and communication
  • Section K – Financial and insurance activities
  • Section L – Real estate activities
  • Section M – Professional, scientific and technical activities
  • Section N – Administrative and support service activities
  • Section O – Public administration and defence; compulsory social security
  • Section P – Education
  • Section Q – Human health and social work activities
  • Section R – Arts, entertainment and recreation
  • Section S – Other service activities
  • Section T – Activities of households as employers; undifferentiated goods and services producing activities of households for own use
  • Section U – Activities of extraterritorial organisations and bodies

Which SIC code should I use?

You should use the SIC code that best fits the activities of your business. In most cases there will only be one or possible two options to choose from that actually fit your organisation.

If however you’re a company with lots of activities that can’t be described with one code, it is possible to use up to four.

One example of this would be a bookshop and café. Which respectively would be classified under:

  • 47610 (retail sale of books in specialised stores)
  • 56102 (unlicensed restaurants and cafes)

Make sure you aren’t choosing arbitrary codes for your business, though. HMRC won’t be afraid to penalise businesses if they feel like the wrong code has been chosen.

If you’re in any doubt about which code is right, don’t hesitate to contact Companies House, they will be able to confirm the right code(s) to use.

What happens if you choose the wrong SIC code?

There is no real penalty to accidentally choosing the wrong SIC code, but it can cause administrative difficulties for the business including;

  • Issues when dealing with HMRC for tax purposes. As HMRC uses SIC codes to calculate which tax applies to any given business, having the wrong code could cause your business to be put in the wrong tax bracket.
  • As lenders use SIC codes to assess the risk of lending to businesses, having the wrong one could negatively or positively affect your rating in the eyes of lenders which could potentially make it harder to get funding when needed.
  • Companies House may issue fines for inaccurate filing should your company be audited and found to have the wrong SIC code.
  • Knowingly providing the wrong SIC code gives misleading information about the nature of a business’s activities. This could be a red flag for anyone researching the company such as partners or investors in the future.

Although there will be no immediate or severe consequences to selecting the wrong SIC code, it can cause issues down the line so the best thing to do is to select the right option to start with or check with Companies House if you are unsure on which one to choose.

How to change your SIC code

There are times when you need to change the SIC code of your company. Whether it was a mistake on your end to begin with or the nature of your business has changed over time, you’re going to need a new one.

To change your SIC code, you’ll need to file an early confirmation statement with Companies House. You’re going to find this form online and it should take less than 30 minutes to complete. After filling it out, you will then be able to update your SIC code on the Companies House register.

Alternatively, you can also update your SIC code on your annual confirmation statement if this is due shortly. Once updated with Companies House, you should also make HMRC aware of the changes so they can update the tax records for the business.

What if my business description doesn’t fit into a SIC code?

With over 600 SIC codes to choose from, it’s unlikely that you won’t be able to find a relevant code to use, especially as you can select multiple SIC codes. If you are really struggling, simply get in touch with Companies House to check. An accountant may also be able to help you and they can also assist you when completing your confirmation statement and articles of association too.

Do I need a SIC code if I’m a sole trader?

No, sole traders don’t need to file confirmation statements with Companies House, so they don’t need a SIC code. It’s only limited to companies that have to have one.

If you file tax returns for HMRC or ask for finance from banks or other lenders though, you may be asked to provide your SIC code. This is because they use the code to assess your risk profile as a business.

When this happens, look at the list of SIC codes on the Companies House website and choose the one that describes your business activities best.

How to check your SIC code

If you’re not sure what your company’s SIC code is, you could find out by searching the Companies House register or looking at your confirmation statement.

The latter will include information on all the data that’s been submitted to Companies House, including your SIC code. Or you could get in touch with Companies House directly and ask them which SIC code has been associated with your business.

FAQs

Which SIC code should a dormant company use?

A dormant company is one that is not trading and does not have any significant financial transactions going through its books.

A dormant company is one that is not trading currently and without any financial transactions on record. In this situation, companies should choose SIC code 99999 (Dormant company). This lets HMRC know that you’re no longer active and as a result, will not need to pay corporation tax.

Which SIC code should a non-trading company use?

A non-trading company is a company that is not actively trading but still has financial transactions going through its books.

A non-trading company is one not actively trading but does have a few financial transactions on record. In this instance, the code 74990 should be used as this tells HMRC that no active trading is occurring but the company is still active.

Does every business have a SIC code?

Yes. In order to file an annual confirmation statement and submit precise tax returns, all limited companies must have an applicable SIC code away.

Is a SIC code a legal requirement?

Yes. It is required to provide a SIC code for the business when incorporating a company. Without it, you cannot legally create a limited company. Companies House uses this code to determine what type of business you are running.

Every time you file a confirmation statement, you will be asked to check and update this code. Make sure it’s accurate since this is the only chance to do so.

If you have a limited company, you are required by law to have a SIC code assigned to your business. You are not allowed to run your business without a SIC code.

Final thoughts

Understanding SIC codes and their uses may seem daunting at first, but it’s an entirely manageable task thanks to the guidance available from Companies House and HMRC.

The standard classification codes make it easy for multiple organisations to accurately assess and categorise businesses based on their main activity. By choosing the right SIC code, you will support seamless interactions with regulatory bodies and make your business as easy as possible to do business with.

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