What is an Employer Reference Number?

Employer reference number is a unique number containing a set of letters together with number provided by HMRC to identify your business. It is provided when you first register yourself as an employer with HMRC. It is also mentioned on tax forms as an employer PAYE reference number. Employer reference number includes 3 digits HMRC tax reference number and a number which specifies the uniqueness of your business. The employer reference number is divided into two parts and it will look like – 145/AB56789

How to find PAYE Reference Number?

When you register as an employer with HMRC, HMRC provides you ERN number in the employer’s welcome pack. There is no need to apply for employer PAYE reference number as the same will be automatically issued to you when you register yourself as an employer. HMRC issues multiple employee reference numbers in case your business has separate PAYE schemes over multiple locations. Therefore, it is very important to keep track of these PAYE reference numbers across different business locations.

When I need an Employer Reference Number?

Employer reference number can be used in many ways. The following situations in which Employer reference number is needed is given below –
  • You can see this number included in employee’s pay slips, P60’s, P45’s, P11D’s.
  • You need this number while purchasing employer’s liability insurance.
  • It is needed when you contact HMRC regarding Income tax and national insurance.
  • It is needed at the time you completes your PAYE return at the end of the year to ensure that everything is correct and filed properly.
  • Sometimes employees may ask you for this number in case of applying for students loan or tax credits.
ERN should be presented on yearly returns. Invalid or absent ERN’S are the most common reasons of rejection of yearly returns reported to HMRC.

I’ve lost my Employer Reference Number

In case you are unable to find your original employer’s welcome pack, then you must check your employer reference number on other material from HRMC. It is also included in P45’s & P60’s.

When you don’t need an Employer Reference Number?

In case you don’t need an employer reference number, you don’t have to register under PAYE. You don’t need an employer reference number in the following situations –
  • If your employees are paid as self-employed
  • If your employees are paid by the agency
  • If your employees earnings are less than £113 per week.
  • If your employees are unpaid volunteers
You are also exempted in case your business is located in the Channel Islands or the Isle of Man.

Using PAYE Reference Number for Insurance

PAYE reference number is used by the employer’s liability tracing office (ELTO) in order to issue the insurance claims made by the employer. ELTO uses your PAYE reference number to identify whether you were insured at that time or when the insurance claimant worked for you. PAYE reference number helps you in establishing that the business had appropriate insurance in case of any claimant was employed by you. It is also applicable in case it is for distant future. After proving the same, the insurer picks up the compensation bill instead of you. Therefore, you must share your ERN in case you are arranging your policy with your insurance broker. Employment liability insurance is a legal agreement made between the businesses and their employees. Therefore, it is good if you involve your payee reference number and makes yourself secure for future.

Why Nomisma Payroll Software?

Nomisma payroll is designed to keep payroll for small businesses simple, including al the essential features and streamlining the process to keep your admin time to an absolute minimum. If you are looking for Small Business Accounting Software which submits your payroll data directly to HMRC before the tax deadline, Try Nomisma with 14 days free trial or You can also call our accounting experts at +44(0)20-3021 2326 or e-mail us at [email protected]o.uk