What is a SIC code and why is it important?
Before setting up your property business, whether you operate buy to lets, invest in property or manage properties as a letting agent, you may need to incorporate your property management business by creating a Ltd company
During the company incorporation process on Companies House, you will need to choose your company’s SIC code based on the nature of your business activities. There are over 600 SIC codes to choose from and multiple ones for property which can be overwhelming if you are new to this
If you are a property investor, there are two main SIC codes you are likely to be interested in. If your property company is buying and selling property e.g. flipping residential homes or non-residential buildings, then the SIC code for your business activities will be 68100 “Buying and selling of own real estate”. This is a trading business.
If you let properties you own (e.g. buy to lets) then your activities will fall under SIC code 68209: “Letting and operating of own or leased real estate”. It doesn't matter if its furnished or unfurnished
If your property company is sourcing properties or providing intermediary services in buying & selling of property on a fee or contract basis, such as an estate agent, then the relevant SIC code for your activities will be 68310 “Real estate agencies”
If your property company is managing properties on behalf of a landlord e.g. a letting agent, then the right SIC code is 68320 “management of real estate on a fee or contract basis”
Traps to look out for
Speak to your mortgage lender about what SIC codes lender will lend on. Sometimes, they wont lend if there are certain combinations or types of SIC code used by the company. E.g. Some lenders wont lend if multiple SIC codes are chosen for a company. Or if you want a Buy To Let mortgage to buy a property and the SIC code of your Ltd company is not 68209.
Speak to your tax accountant if you are mixing trading as well as investment activities within the same Ltd company as they are two separate activities, which can have an impact on tax, such as Inheritance Tax for example. It's often far simpler to keep trading and investment activities in separate Ltd companies.
References:
[ Ссылка ]
Music from #Uppbeat (free for Creators!):
[ Ссылка ]
License code: ACXPT3JXBLXZ2D9N
