A Standard Industrial Classification (SIC) code is a five-digit number used to officially describe your business’s core activities to Companies House and HMRC. In simple terms, it tells them what your business does.

Choosing the correct SIC code is important, as it can affect things like how much you’re able to borrow, how VAT is applied to your business, and even which grants or funding opportunities you’re eligible for.

In this blog, we’ll explain SIC codes for property businesses and help you identify which one is right for your company.

What is a SIC code?

A SIC (Standard Industrial Classification) code defines the nature of your business and the activities it undertakes. You’ll need to select one when you register a limited company with Companies House.

For property companies, choosing the correct SIC code is crucial because an incorrect classification can delay or even block financing. In some instances, using the wrong property SIC code can create tax complications if your company accounts seem ‘abnormal’ for your industry.

Lenders, for example, rely on SIC codes when assessing risk, so selecting the wrong one can also result in mortgage applications being declined.

What SIC code should I use for my property company?

There are lots of SIC codes, and you might even have more than one depending on your business. We’ve put together the most common ones for property companies, but you can also check HMRC’s SIC code list in case the right one for you isn’t listed.

SIC Code 68209: (Other letting and operating of own or leased real estate)

This code is used for businesses that:

• Let or operate their own or leased real estate
• Are not classified elsewhere within real estate activities

Typical examples include the letting of residential or commercial property, operating apartment buildings, flats, offices, or industrial units.

This is a common code for any ‘Special Purpose Vehicle’ (SPV) companies (which is a company set up solely for buying, selling and renting property). So, if you’re a landlord looking to rent properties out long-term, this is the code you’ll typically use to register your company.

SIC Code 68100: (Buying and selling of own real estate)

This code is primarily used by:

• Property developers that buy and quickly resell properties
• Or companies that do the same

If your business trades properties for profit then this could be the right code for you. But it’s worth noting this code can be seen as ‘high-risk’ by some buy-to-let lenders because it classifies a company as a ‘trading company’ – which can be more unpredictable.

SIC Code 68310: (Real estate agencies)

This code is commonly used by:

• Real estate agencies
• Businesses who act as an agent for buying/selling/letting

It’s typically for businesses that find properties for investors and act as their agent.

SIC Code 68320: (Management of real estate on a fee or contract basis)

This code is used by:

• Property management companies
• Letting agents who handle properties for other landlords

It’s important to note this isn’t for landlords who own or manage their own property; it’s for companies that manage property on a landlord’s behalf.

What do banks use my SIC code for?

Banks use SIC codes for a number of things including:

• Risk assessment and compliance
• Regulatory reporting
• Internal sector classification
• Credit underwriting (loans, mortgages, overdrafts)

They’ll also cross-check your SIC codes at Companies House against your stated business activities, financials, and actual transactions. Any inconsistencies can raise questions, which is why it’s important to ensure everything is accurate.

Can an SIC code affect mortgage or lender decisions?

Yes – because lenders use SIC codes to determine your business’s purpose.

Banks and lenders want to determine whether you’re high or low risk. For example, property investment or letting is often seen as lower risk, whereas property trading and development is higher risk.

Does my SIC code impact business insurance?

Yes, just like lenders, an insurer will use your SIC code to determine an industry’s risk level. A higher-risk code is likely to lead to higher costs, rather than a lower-risk one. For example, a company with SIC code 68100 (buying or selling of own real estate) is likely to have a higher premium than a lower risk company (for example, a landlord with a SIC code of 68209).

Opening a business bank account

Your SIC code will be checked when opening a business bank account but any minor mismatches are usually fine. Problems are more likely to arise if your SIC code suggests higher-risk activity than what you’ve declared. For example, if your SIC codes suggest your business is involved in development rather than letting.

Banks focus more on your business activity, source of funds, transaction patterns, and accounts and cash flow.

Does my SIC code affect VAT?

Yes! So, it’s important you get it right. This is because your SIC code is used to identify your business activities as well as your tax liabilities, so it’ll take into consideration:

• Industry specific rules: For example, certain industries have specific VAT rules and exemptions, so the correct code ensures the right VAT treatment is applied
• Whether you qualify for the Flat Rate VAT Scheme: If you use the VAT Flat Rate Scheme, the flat rate you pay depends on your type of business. This is based on your SIC code, which classifies your trade activity.

Using the wrong SIC code could lead to HMRC querying your VAT return – especially if your activities don’t add up to the sector you’re listed in.

Does my SIC code affect other taxes?

Whilst your SIC code doesn’t directly determine your property tax bill, it can affect how HMRC view your business. For example, some industries may have specific reporting or regulatory requirements so ensuring your business uses the correct one is important to stay compliant.

It can also affect whether you’re eligible for government grants, because some are only available to companies in a specific industry. Your SIC code will be used to determine whether you’re eligible.

How many SIC codes does my company need?

You’ll need at least one SIC code to describe your company’s core business, but you can use up to four. Whilst one code is usually sufficient, multiple codes help give Companies House the full picture if, for example, your company runs varied operations like property sales and rentals.

Tips for property companies when using SIC codes

If you run, or plan to run, a property company – here are the key things you need to remember:

• Use accurate SIC codes
• Use multiple codes if needed (Companies House allow up to 4)
• Always put your primary SIC code first. This is the one that describes your main business activity
• Ensure you update your SIC code if your strategy changes

Choosing the correct SIC code for your property business can be confusing. If you’re not sure which one to use, or which one should be your primary code – speak to an accountant. Any misalignments between your SIC code and your business activity can block your business from moving forward.

 
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