What is a SIC code?

What is a SIC code?

A Standard Industrial Classification (SIC) code is a 5-digit industry classification last updated in 2007 which helps identify what area a business is working in. SIC codes help to collect and present a huge range of data that enables firms to be classified and for statistics to be gathered within a standardised framework enabling meaningful comparisons to be made across regions and time frames.

With 21 broad categories and over 600 individual codes to choose from, there’s a SIC code for everything – even if your company is dormant or non-trading (that’ll be 99999 and 74990 respectively).

A SIC code will group companies together based on these business activities, which in turn is vital for tracking wider economic progression, understanding emerging markets, and detecting the growth and challenges within each industry.

Having a SIC code is mandatory when sending a confirmation statement to Companies House. It’s also a public record, meaning that if you’re looking for things like a loan or insurance, service providers can look at your SIC code to help analyse your business and the risk they may be taking on. This is why it’s vital to make sure you use the most relevant one.

What does a UK SIC code look like?

SIC codes used to only contain 4 digits. However, the current Companies House SIC code format is made up of 5 numbers that range from 01110 to 99000 and look like these examples:

• 02300 – Gathering of wild growing non-wood products
• 10850 – Manufacture of prepared meals and dishes
• 47721 – Retail sale of footwear in specialised stores
• 70229 – Management audits consultancy services
• 68310 – Real estate agencies
• 82990 – Other business support service activities not elsewhere classified

Companies are often diverse and provide a variety of services or activities, so Companies House allows for up to 4 SIC codes to classify different types of activities that the business operates. For example, a farm shop that sells plants and runs a cafe. If selecting more than one, then you’ll have to choose a primary SIC code that explains the main business activities – usually the one that generates the highest revenue.

If you registered your company a while ago and would like to check what your company’s SIC code is, it’s simple. Head to the Companies House website and search for your company name or registration number. Once you select your business from the list, you’ll spot its SIC code at the end of the overview tab.

How are SIC codes used and why are they important?

Authorities and Government agencies like Companies House and the Office for National Statistics (ONS) use SIC codes regularly, as it helps them see and understand the business activities of UK companies. But that’s not all. SIC codes can be beneficial for company owners too.

Here are the three most common uses for the system:

1. For agencies to oversee and analyse industries

The UK Government uses SIC codes for tax classification and to organise company filings. This top-level grouping of businesses is also handy for agencies to analyse the growth, trends and, if necessary, problem areas for specific industries. For example, they can be used to assess how retail trade is performing during periods of economic uncertainty. More often than not however, the Government uses them for statistics and studies, because SIC codes present a standardised and transferable way to present a broad range of handy economic data.

2. For companies to apply for financial assistance and insurance

If you apply for a business loan, chances are the lender will ask for your company’s SIC code. This is so they can work out the level of risk that’s associated with your businesses’ activities. Similarly, the type of business being carried out will be one the aspects of the decision-making process that will affect whether a loan or some other financial service may be offered.

3. For companies to connect with clients and customers

If your company sells products or services to other businesses, SIC codes can be a handy way to identify appropriate targets, to choose and qualify prospects and customers to work with. Also, understanding the type of activity a business is in helps you tailor content messages to demonstrate your understanding of their needs and issues.

What happens if I use the wrong SIC code?

There are no Government regulations or penalties for the incorrect use of SIC codes, but if the SIC chosen originally is wrong, or the businesses has changed its main activity, registered companies need to file a confirmation statement – the annual report that gives Companies House an overview of your company’s status and situation.

This statement lets you add and remove SIC codes at any time. Similarly, if your company has become dormant or is no longer trading, the SIC code must be updated to reflect this.