Employers registered with HM Revenue and Customs will receive a range of details and reference numbers. The Employer Reference Number (ERN) – which is also known as an employer PAYE reference – is a vital number that you must hold on to.
What is an ERN?
An ERN is given to every business that registers with HM Revenue and Customs as an employer. It is a unique set of letters and numbers used by HMRC and others to identify your company. It is often referred to on tax forms as an ‘employer PAYE reference’.
This reference is made up of two parts:
- A three-digit HMRC office number
- A reference number unique to your business
The ERN will be provided to you in your employer’s welcome pack when you register with HM Revenue and Customs and will also appear on a range of correspondence from HMRC.
When do I need an ERN?
Your ERN will be required in a number of different circumstances. Perhaps most importantly, you will need this number when you come to complete your end of year PAYE tax return.
An invalid or missing ERN is amongst the most common reasons for the rejection of end of year tax returns and you will need to know this number in order to fulfil your statutory reporting obligations.
It is also likely that you will be asked for your ERN by an employee at some point. Your employees will often need your employer reference number when applying for tax credits, repaying Student Loans and a range of other financial matters. You may also be required to include your ERN on payslips.
You will also need your ERN when purchasing an employers’ liability insurance policy.
What happens if I have lost my ERN?
It is important that you keep hold of your ERN, as you will need it regularly throughout the tax year. If you have lost the number, you will be able to find it on correspondence from HMRC relating to PAYE. It will also appear on any P45s or P60s for previous or current employees.
If you do not have any record of your ERN it may be that you are not registered as an employer. If this is the case, but you are employing or intend to employ someone, it is vital that you register as a matter of urgency.
Why do I need to give my ERN to my insurer?
The Employers’ Liability Trading Office has set up a database to help employees identify their past employers’ insurers in order to make it easier to claim. You will therefore need your ERN when you purchase employers’ liability insurance.
This is in order to identify which firms an employee has worked for, should they make a claim against you. In the event that a previous employee develops mesothelioma after exposure to asbestos and they claim you’re responsible, using ERNs it is easy to see where else that employee has worked (and, for the sake of this example, find out they were only exposed to asbestos in their previous job).
Exceptions to PAYE
In some cases you may not have to register under PAYE and therefore won’t have an ERN. You don’t have you register for PAYE if:
- Your employees are paid on a self-employed basis
- Your employees are paid via an agency
- Your employees each earn less than £113 per week
- Your employees are unpaid volunteers
- Your business is based in the Channel Islands or the Isle of Man