What happens if you use the wrong SIC code?

Selecting at least one SIC (Standard Industrial Classification) code is a required step when registering a new company. It communicates what your business does and how it should be classified.

If you’ve chosen a code and now have doubts about whether it’s the right one – or if your business has changed direction since incorporation – you might be wondering what the consequences are and whether it needs fixing.

While there are no penalties for choosing the wrong SIC code, you must ensure that it’s accurate and gives good coverage of your business’ activities.

In this article, we explain what happens if you use the wrong SIC code, why it matters, and how to update it with Companies House.

What is a SIC code, and why is it important?

SIC codes (Standard Industrial Classification) are 5-digit numbers that indicate which industry or industries your company operates in. When you register your company, you must select at least one SIC code, but you can choose up to four if your business spans multiple activities.

These codes help classify businesses for official and commercial purposes. Companies House, HMRC, investors, lenders, and other organisations use SIC codes to:

• Categorise businesses by sector for statistical analysis
• Identify which industries companies operate in
• Support industry research and economic data collection
• Assess business activities and risk profiles at a glance

Your SIC code appears on your public Companies House record, meaning anyone can look it up.

The codes can be remarkably specific. For example, 01110 covers “Growing of cereals (except rice), leguminous crops and oil seeds”. Or they can be quite broad – 99999 is used for dormant companies that aren’t currently trading or conducting any business.

You can view more examples in the Companies House condensed list of SIC codes.

What happens if your SIC code is wrong?

Fortunately, nothing happens – from a Companies House perspective – if you use the wrong SIC when forming your company. Unlike failing to file accounts on time, an incorrect SIC code does not trigger an automatic fine.

• I’ve forgotten my company’s SIC code
• UK business laws you need to know
• Do I need to tell Companies House when I move house?

Perhaps you made an error and selected the wrong SIC code during the company formation process. Or maybe you used a code in good faith, only to find a few months into your company’s lifetime that the code was inappropriate. Either way, you can easily fix it by updating your SIC code through your confirmation statement.

This isn’t to say your SIC code simply doesn’t matter at all. It’s still an official business categorisation used by both government bodies and third parties, including other businesses, lenders, and insurance companies. You have a duty to report the correct one(s) – ensuring accuracy is in your commercial interests.

Why is SIC code accuracy important?

There are no fines for having an incorrect SIC code, but getting it right matters more than many assume. Here’s why:

1. Better visibility for relevant opportunities

Your SIC code appears on the public Companies House register alongside your company name, registered office address, and director details. It’s often the first indicator of what your business does when someone looks you up.

Grant providers, procurement officers, and business support organisations often search for companies by SIC code. If your code accurately reflects what you do, you’re more likely to:

• Appear in searches for relevant grant funding and sector-specific support schemes
• Be identified for industry-specific business development programmes
• Receive invitations to tender for government and local authority contracts in your industry
• Get included in industry directories and supplier databases used by large organisations

If your code doesn’t reflect your business activities, you could miss out on contracts relevant to your business.

2. R&D tax relief eligibility

If you plan to claim Research and Development (R&D) tax relief, your SIC code plays a critical role in HMRC’s assessment process.

Since August 2023, all R&D claims must include your SIC code on the Additional Information Form (AIF). HMRC uses these codes to assess whether your business operates in a sector where R&D activities are common. HMRC has stated explicitly that there are SIC codes where R&D is not expected and that it will potentially review these claims in more detail.

Suppose you develop software for restaurants, but registered your business with SIC code 82990 (Other business support service activities n.e.c.). If you submit an R&D tax relief claim for your development work, HMRC may see this vague code and question whether you’re truly doing R&D.

Using the right software development code would better reflect your work as genuine, R&D-focused activity.

3. Business insurance premiums and loan applications

Lenders and credit agencies such as Experian highlight how lenders and insurers use SIC codes to determine how risky your business is, and therefore what terms you’ll be offered.

When you apply for business loans, credit cards, or credit accounts, banks check your SIC code as part of their risk assessment. If your code puts you in a higher-risk category, you might, in theory, face:

• Automatic loan declines
• Higher interest rates or reduced credit limits
• Longer approval times

Similarly, when you apply for business insurance – public liability, professional indemnity, commercial vehicle cover – insurers look at your SIC code to understand:

• What kind of work you do
• What risks your operations face
• Claims history for your sector
• What coverage makes sense for your industry

It’s impossible to state how much risk this truly represents, but it’s likely low for the vast majority of businesses. However, given the higher interest rate environment and the squeeze on credit for smaller businesses, particularly, it could make a tangible difference.

4. Contributing to industry statistics

SIC codes contribute to official industry data and economic statistics (e.g. those compiled by the ONS).

If your code is incorrect, it can skew the data for your sector. This won’t harm your business directly, but it does mean you’re contributing to less accurate industry-wide data.

5. Industry networking and benchmarking

Trade associations, industry bodies, and networking organisations sometimes use SIC codes to identify potential members or event participants. The right code can help you connect with relevant industry groups and access sector-specific resources.

It also helps when you want to benchmark your company’s performance against similar businesses in official statistics and industry reports.

6. Opening business bank accounts and forming partnerships

Your SIC code can also affect whether banks and other service providers are willing to work with you in the first place. Banks, in particular, assess SIC codes as part of their onboarding process, and some have strict policies around industries they consider higher risk – such as cryptocurrency, gambling, or money services.

If your SIC code falls outside a bank’s risk appetite, you could find your application for a business bank account declined before it’s even properly assessed. The same could apply to other service providers, such as payment processors.

An example scenario: When SIC codes need updating

Consider an entrepreneur who registered a company with SIC code 62020 (Information technology consultancy activities) because they initially planned to offer IT consulting. Six months later, the business pivoted to focus primarily on software development after landing a major contract.

The original SIC code no longer accurately represented the main business activity. The more appropriate code would be 62011 (Ready-made interactive leisure and entertainment software development) or 62012 (Business and domestic software development).

While this discrepancy won’t trigger any penalties, they decide to update their SIC codes to ensure the company is properly represented to potential clients, partners, and investors who might review the Companies House information. The two new codes could be added to the existing code, which may still be relevant, or you could also replace the original altogether.

This may also enhance the company’s odds of claiming R&D tax relief, since the company switched from a consultancy SIC code to one that indicates software development – a sector where HMRC expects to see legitimate R&D activity.

How to change or update your SIC code with Companies House

Correcting or updating your SIC code is straightforward. You simply need to file a confirmation statement (form CS01) with Companies House.

Among other things, this is the annual report that confirms that your company’s general non-financial details are up to date with Companies House. Each time you file a confirmation statement, you can add, remove, or replace your SIC codes to reflect your business’s operations.

You can change your SIC code as many times as needed throughout your company’s lifetime.

Step-by-step: Updating your SIC code

Here’s exactly how to change your SIC code:

Step 1: Decide when to file

You have two options for timing:

• Wait until your confirmation statement is due (no later than 14 days after the end of your 12-month review period)
• File an early confirmation statement at any time during the review period if you want to make the change sooner

The review period starts on either the date of company formation or the statement date of the previous confirmation statement.

For example, if you formed your company on 1 May 2025, your 12-month review period runs from 1 May 2025 to 30 April 2026. Your first confirmation statement would be due by 14 May 2026 (14 days after the review period ends).

Step 2: Access the confirmation statement

You can file your confirmation statement:

• Online through the Companies House WebFiling service
• Through your formation agent or accountant
• Using third-party company secretarial software

Step 3: Update your SIC codes

When completing the confirmation statement, you’ll see a section for SIC codes. Here you can:

• Add new SIC codes (up to a maximum of four)
• Remove SIC codes that no longer apply
• Replace all existing codes with more appropriate ones

Step 4: Submit and pay

The filing fee for a confirmation statement is £50 online or £110 by post.

There’s no separate fee for updating SIC codes – the change is included as part of your standard confirmation statement filing.

Once submitted, your updated SIC code will typically appear on the public register within a few hours (or by Monday morning if you file over a weekend).

Multiple changes are allowed

If you file multiple confirmation statements within the same 12-month review period, you only pay the fee once. Any additional statements filed before your next review period are free.

Need help filing your confirmation statement?

If you’d rather have an expert handle the paperwork, our Confirmation Statement Service takes care of everything.

One of our company secretarial specialists will complete and file the form, ensuring your SIC codes and all other company details are accurately updated with Companies House.

Check and amend your SIC code if necessary

Getting your SIC code wrong when you form your company isn’t a disaster – there are no automatic penalties, and it’s easily fixed. However, an inappropriate SIC code could, in theory, impact your business.

If you’ve identified an error with your SIC code, simply file a confirmation statement with the correct code when convenient. Keeping your SIC code accurate helps your business present itself correctly to insurers, lenders, stakeholders, authorities, and potential partners.

Need help choosing the right SIC code or filing a confirmation statement? 1st Formations offers business formation and support services to help you stay compliant and present your business professionally.