Last week I answered a question regarding finding the right SIC code for a new Ltd Company. Please find the video here!
Due to Section 24, many of us are moving to using a Limited Company as the vehicle through
which we conduct business in the Property Industry. It can be a lot more tax efficient these days,
due to the methods by which a Limited Company will be able to claim tax relief, handle
remuneration and calculate profits against the methods available to an individual.
For those who don’t know, a SIC code is a numbered code that describes the nature of your
business and what industry it trades within. When you set up your Ltd company on Companies
House, you will have to choose the relevant SIC code for your business and when it comes to
submitting your accounts it will be used again.
If you go for bank finance, which you probably will and I always recommend, the SIC code will
provide the bank with the business nature of your Ltd company is as well. Additionally, as the
database for Companies House is free to view online, it will provide the public with the business
nature of your company if they want to look you up.
Any Ltd company can have up to 4 SIC codes, but I recommend that instead of having a Ltd
company that takes part in multiple different activities within the Property Industry, you have a
Ltd company for each SIC code you will be using.
For example, if one of your businesses is in Buy-to-Lets, have one Ltd company with one SIC
code, and for the Flip side of your business, have another Ltd company with its own relevant SIC
code.
There are 4 SIC codes relevant specifically to Property.
68100 Buying and Selling of own Real Estate. This SIC Code is the one to use for Flipping
property.
68209 Letting and Operating of own or leased Real Estate. If you’re going to have Buy-to-Lets
and hold them, this will be the one for you.
68320 Managing of Real Estate on a fee or contract basis. This is especially useful when
considering a time when your portfolio might grow large enough that managing it all yourself
through an employee would be the right move, as you will also be able to manage other people’s
properties.
68310, for Real Estate Agencies. This will also be the right code for packaging deals, as you are
buying and selling property for a third party.
