For someone just starting out in business and wanting to officially register their business with Companies House, there are a few regulatory requirements that you need to apply to your business. One of these requirements is allocating an appropriate SIC code. Every registered UK company must report a SIC code. But what exactly is a SIC code and how does it apply to your business?
Firstly, the term SIC code stands for ‘Standard Industrial Code’. While SIC codes are important for your business, they are still quite misunderstood by many new business owners.
Basically your SIC code is a way to describe and categorise what your business does. It is a system that Companies House use to provide information about the type of business you have and to give a general overview of your business activities. The classification of each company is available for anyone to view on the public record. You will need to know your SIC code for when you submit your Confirmation Statement each year.
SIC Codes Explained
Depending on what your particular business activities are, your company will fall into a certain category. Companies House keep a comprehensive list of possible types of businesses that operate in the UK which are arranged together under similar trade classifications. There are now approaching 100 different SIC code categories to choose from. Your SIC code will be the one that matches or is the closest type of business sector you operate in.
Each sector or trade group has a SIC code applied to it, but more detailed classifications are allocated within each group according to their specialisation. So for example, trade group I refers to Transport, Storage and Communication businesses. Obviously this can cover a very wide variety of different businesses under this umbrella, so further individual codes are then assigned according to what they actually do.
Each and every registered UK company selects one or more SIC codes that express the nature of their business from an official list of SIC codes provided by Companies House.
Lets say you run a heavy haulage freight transport company. Your company would fall under category 49.4 that covers Freight transport by road and removal services. This group includes all land-based freight transport activities other than rail transport. Because your business specifically uses the road network to operate, you would then come under SIC category 49.41 Freight transport by road. This class includes all freight transport operations by road including:
- logging haulage
- stock haulage
- refrigerated haulage
- heavy haulage
- bulk haulage, including haulage in tanker trucks including milk collection at farms
- haulage of automobiles
- transport of waste and waste materials, without collection or disposal
- renting of trucks with driver
- freight transport by man or animal-drawn vehicles
When do I need a SIC code?
SIC codes are something that as a business owner you don’t necessarily think about or even have to deal with on a day to day basis. The fact that you actually need to have one is only realised when you are submitting your Confirmation Statement to Companies House when there are any changes to your SIC code(s) that need reporting. A SIC code is also needed to form a new company and to be able to allow you to successfully complete your filing process for your first annual Confirmation Statement should your business undergo any changes.
How do I discover my business’s SIC code?
In order to find the correct SIC code to suit your business, you should use the Companies House official SIC code list. You will first need to find out what your actual trade description is before you can find the right SIC code category on the list. There is a condensed PDF version of the SIC code list here.
The SIC Code list is divided into different trade groups, and while you can search for your code by entering your trade description, it may take a little bit of digging around to find the most relevant match to suit your business activities. This can be quite difficult to define if you work in a particularly obscure sector, so it may take a while to find the closest possible match if there isn’t an exact category that fits.
Some of the trade classification categories are very specific and will be quite obvious by its very description,‘Striking of coins’, for example. But other categories are a bit more vague and can cover quite a variety of different activities, ‘Other food services’, for example would be a category to choose if you cannot find an exact match for your food-related business activities.
Changes to the SIC Code System
The list of SIC codes is ever growing and changing because it aims to be the most comprehensive list of classifications as possible. The most recent major changes came about in January 2008, where a 2007 version of the code was introduced. This means that all 2007 codes have five digits, while the older 2003 revised codes only had four. All Annual Returns made since 1 October 2011 have required a 2007 version of the code.
Whether SIC codes will go under any further changes in future is unknown, but as more diverse industry sectors evolve and develop, it is highly likely that SIC codes will undergo some more changes in years to come. In fact, since the original list was created back in 1948, there have been revisions published in 1958, 1968, 1980, 1992, 1997, 2003, and 2007.
How many SIC codes does my company need?
In most cases a business will only need one single SIC code to cover their activities. This may be one that best describes the nature of the business, especially if it involves dealing with just one product or service, such as business accounting or carpet manufacturing etc.
There is an option for a company to choose up to four SIC codes should they need to, so if your particular business is quite complex in nature, or you offer varied services that cross different sectors, then a single SIC code will not be able to fully describe what your company does. In this case you can choose more than one code to cover all you bases.
Do I need a SIC code to form a new Company?
As of the 30th June 2016, all new businesses need at least one SIC code to be able to form a company. The SIC code should be chosen that best describes the planned business activities of the new company. Without at least one or more valid SIC Codes, Companies House will reject your formation request. It would save you a lot of time and hassle to plan ahead and sort out your SIC code before you go through your company formation process.
Reporting your SIC Code
If you formed your company after 30th June 2016, your SIC codes need only be included in your Confirmation Statement if they have changed during the year since formation. It can be more common than you think for a change to happen. Should your company expand, change its business sector or offer a more diverse range of services that would require different SIC codes to explain its activities, then Companies House would need to be updated with this information.
You will only have to report your SIC codes in your annual Confirmation Statement each year as and when they change. There is no need to report SIC code changes immediately – you can wait until your next annual Confirmation Statement to report them.