Standard industrial classification (SIC) plays an important part in labelling a company’s operations appropriately to communicate what they do. A standard industrial classification code is used as a simple way of communicating what a business does. It’s important that the most appropriate SIC code is chosen as this information will be used by government agencies, financial institutes and stakeholders to quickly see what a business does.
If you own a business or company, then understanding what SIC codes are is important for business compliance, accurate reporting, and communication. The SIC code system is universal and can be an effective way to quickly summarise your business offerings.
Below we’ll explore what your primary SIC code ought to be, explain the SIC system in greater depth, and explore different UK SIC codes so you better understand what your business’ ought to be.
Table of Contents
What Is A SIC Code?
Standard industrial classification codes, SIC codes, or industrial classification sic codes are all the same thing. They’re essentially a classification system for grouping companies and their operations. It’s an information standard that’s maintained in the UK and EU, and every registered company must submit a SIC code.
Each SIC code is made up of 5 digits, and are organised into sections based on industry. For example, if your company specialises in manufacturing lifting and handling equipment, the SIC code for your company would be 28220.
Of course, not every business in the UK will fit neatly into a single SIC code. Businesses specialising in business support service activities that can vary considerably are allowed up to 4 SIC codes to better explain their niche.
Regardless, every limited company in the UK is required to submit a code alongside their annual accounts each year. Companies House uses this to describe which sector your business operates in, and this information is then shared with the public.
There are over 600 SIC codes, so finding the one for you could be difficult, but you can find help online if you’re unsure. Companies House posts a full list of codes and their descriptions on their website for business owners.
When Do You Need A SIC Code?
If you’re a registered company with Companies House then you’ll need a SIC code to submit alongside your annual accounts. This helps with registering for corporation task, as an employer, and with maintaining business records:
- Filing annual accounts: this is required to describe your industry classifications/sector
- Registering for corporation tax: this is required to ensure you are part of the right tax classification and to ensure you’re paying the right taxes based on your business activities
- Registering as an employer: this is required to ensure your business is categorised correctly for employment tax and payroll
- Applying for business loans: this is required so that the lender can assess risk levels based on industry group
- Public record: this is required as part of the public record so your customers can see what area you operate in and business investors and partners can decide if you might be right for them
How Do You Find Out Your SIC Code?
You can find your SIC codes online if you’ve already filed your annual accounts before. Simply check the government website.
Unsure what to register with if it’s your first time? You can always contact Companies House directly and seek their assistance.
Types Of SIC Code
SIC codes are split into categories as a letter. These sections help you quickly identify the area you ought to be looking for your SIC code.
- 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?
Find the SIC code that fits your business activities best. It’s often best to choose the most appropriate SIC code or, if it helps, you can choose up to 4 SIC codes to help describe your business in the best way possible.
A bookshop/café business could, for example, be classed as:
- 47610 (retail sale of books in specialised stores)
- 56102 (unlicensed restaurants and cafes)
Don’t just choose codes for the sake of choosing codes. If you use too many codes that confuses what your business actually does, then HMRC might choose to penalise you for not being accurate.
You can call Companies House to check which code is right for you to avoid any potential penalties.
What Happens If You Choose The Wrong SIC Code?
Choosing the wrong SIC code causes administrative issues:
- Issues with paying the right tax as HMRC uses SIC codes to calculate the right taxes and tax amounts for businesses. Providing the wrong code could mean you pay the wrong tax and you could faces fines for doing so.
- Business loan lenders use SIC codes to assess risk – having the wrong one can affect your rating meaning you might miss out on the financial support you need to expand your business.
- Inaccurate filing can result in fines from Companies House.
- If you deliberately provide the wrong code to avoid tax obligations, you could face legal repercussions.
The wrong SIC code can cause issues down the line so it’s really important that you choose the right one from the start.
How To Change Your SIC Code
Whether through mistake or due to a change in business activities, UK companies do have the option to change their SIC codes.
To change, you’ll need to file an early confirmation statement early with Companies House. The form is online and only takes 30 minutes or so to fill out thoroughly. Once submitted, you can then update your code.
If your business activities change with a new annual account submission, it’s also possible to update the code on your annual confirmation statement. Once updated, you should also contact HMRC to ensure they know about the change for tax purposes.
What If My Business Description Doesn’t Fit Into A SIC Code?
With 600+ codes to choose from, you’ll more than likely find a code for your company, especially since you can choose 4 if necessary. If you’re struggling, reach out to Companies House. You might also be able to ask an accountant for help when submitting your annual accounts.
Choosing your company’s SIC code can be complicated but with the right support you’ll be able to find the right one.
Do I Need A SIC Code If I’m A Sole Trader?
Sole traders don’t file confirmation statements with Companies House – only limited companies do, so only limited companies need a SIC code.
However, if you’re applying for a business loan as a sole trader you might be asked to provide a SIC code. In this instance you’ll simply need to look up SIC codes on Companies House and choose the one that best fits you.
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
Getting your head around SIC codes might seem impossible at first, but you can achieve it easily enough with the right support from Companies House, HMRC, or a trained accountant.
Simply check out the Companies House website and search the list of SIC codes to find the one(s) that best describe your business. Get it right, and you’ll seamlessly interact with HMRC and Companies House, making complicated tasks that much easier. It also communicates your business succinctly to investors, partners, and customers, making business dealings that much simpler.
