What SIC code should I use for my property business?
A quick read to highlight what SIC code you should be using, and how to change it.
When setting up a new Limited Company (As a trading vehicle or a Special Purpose Vehicle "SPV") you’ll have been asked to enter a SIC code. Typically when a client gets to this stage they’ll give us a call to ask what a SIC code is and which one they should select. This brief article covers all you need to know about SIC codes in the property sector.
About SIC codes
A SIC Code (short for “Standard Industrial Classification”) is a way in which different industries and sectors are classified by government agencies, most notably Companies House and HMRC. A SIC code is 5 digits and represents a particular activity in a specific industry, most often it’s a case of applying which code fits your business best. A business must have at least one SIC code, up to a maximum of four. As a caveat, it's often best to segregate trading and investment activities by using different companies, this is mostly to preserve entitlement to certain tax reliefs and exemptions.
Why are they relevant?
With more and more investors choosing to invest in property using a Limited Company or “SPV” it’s best to get the SIC code right from the start. Having the wrong SIC code can cause difficulties with finance providers and mortgage lenders. If for any reason you wish to change your SIC code see the end of this article for how to achieve this.
What SIC codes are used in property?
Below we have created a table which shows what SIC codes are relevant to property and who should be using them.
Section L – Real estate activities
|SIC code||Description||What it really means|
|41100||Development of building projects||This is for property developers who plan to build new units or convert commercial units with a view to resale.|
|68100||Buying and selling of own real estate||This is for those who will be flipping or trading. E.g buying to refurbish and resell.|
|68209||Other letting and operating of own or leased real estate||This is for buying property and renting it out. Long-term property investment, most landlords will fall into this category.|
|68310||Real estate agencies||This category is for deal sourcer, packagers, and others when you’re acting as an agent.|
|68320||Management of real estate on a fee or contract basis||This is for property management companies.|
How to change your SIC code
If you need to change your SIC code for any reason this is done when filing your confirmation statement with Companies House. You can either wait until this is due or file an early confirmation statement.
If you would like more information on anything discussed in this article, or to find out how JSM Partners can help your business contact us today.
Article written November 2018 by Joshua Tharby MSc ICPA.