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HMRC internal manual

PAYE Manual

Employer records: set up employer record: trade classes and nature of business

The Trade Class indicator is made up of a prefix letter and a number. It is used to denote the class of trade for the scheme you are setting up. It is used together with the Nature of Business Description by KAI and Other Government Departments when analysing PAYE data, the analysis is used by HMRC and Other Government Departments to determine policy and business decisions.

The prefix is represented by a letter and will be one of the following S, E, C, I, P, F or L.

In addition you will also need to determine the Trade Classification Number (TCN) for the scheme. This is a 4 digit number representing the nature of the business you are setting up. These are contained in the Trade Classification Index (TCI).

From the information supplied you will need to derive a short but meaningful nature of business description. This is especially useful where it is not possible to find an exact match in the Trade Classification Index for the TCN. For example a newsagent’s TCN is 3608. Bear in mind it is not always possible to say one particular scheme type is covered by one specific TCN. You should always use the index to establish the correct number.

Ensure that you select the correct trade class prefix for the employer record you are setting up. This will determine how the computer automatically allocates the employer and Accounts Office reference numbers.

Further information on each trade class is available

  • Select the required trade class
    • Trade Class ‘S’ - Society registered under the Industrial and Provident Societies Act (including Co-operative Societies and Building Societies)
    • Trade Class ‘C’ - Limited Company (including PLCs)
    • Trade Class ‘I’ - Individual Or Sole Trader
    • Trade Class ‘P’ - Public Corporation
    • Trade Class ‘F’ - Partnership
    • Trade Class ‘L’ - Local Authority
    • Trade Class ‘E’ - Close Investment Companies relates to companies that meet specific criteria in relation to the directors and share ownership. It is unlikely that these will be identifiable from the details supplied when registering a new scheme, though you may receive requests from Corporation Tax or Compliance to change the trade class indicator of an existing scheme to ‘E’