Updated for 2019
Employers registered with HM Revenue and Customs will receive a range of details and reference numbers. Many of these can be confusing, and some get lost. But the Employer Reference Number (ERN), also known as an employer PAYE reference, is a vital piece of information that you must hold on to after hiring your first employee.
- How to register as self-employed with HMRC
- Going self-employed in the UK: a self-employment guide to get started
- Self Assessment tax returns: a guide for the self-employed
- Is public liability insurance tax deductible?
What is an Employer Reference Number?
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 the taxman and others to identify your firm. 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, and a reference number unique to your business. It 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 HRMC.
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 return. An invalid or missing ERN is amongst the most common reasons for the rejection of end-of-year returns; 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. Employees often need their employer’s reference number when applying for tax credits, applying for Student Loans, and a range of other tasks. You may also be required to include it on payslips.
You will also need your ERN when purchasing employers’ liability insurance. This is in order to definitively identify at which firms an employee has worked in the event of a claim significantly after the event – for example in the case of mesothelioma claims relating to exposure to asbestos.
What 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. Check our What’s my employment status? handy guide to get clear on what applies to you.
Why do I need to give my ERN to my insurer?
The Employers’ Liability Tracing Office (ELTO) 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. Say they develop mesothelioma after exposure to asbestos and claim you’re responsible. Using ERNs, it’s 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 as self-employed or paid via an agency
- Your employees each earn less than £118 a week
- Your employees are unpaid volunteers
- Your business is based in the Channel Islands or the Isle of Man
If you have a Simply Business policy with us, please submit your ERN if you haven’t already.