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What business owners need to know about Employer Reference Numbers (ERN)

What business owners need to know about Employer Reference Numbers (ERN)

As a business owner, your company is identified through a variety of codes and reference numbers. From VAT to corporation tax numbers, it can sometimes be difficult to keep track of them all. However one particularly important number you must hold on to is your employer reference number (ERN).

Despite this being an important identifier of your company, the significance of it is not widely understood. So what exactly is an employer reference number, why is it so important, and how do you go about getting one?

What is an ERN?

HM Revenue and Customs (HMRC) allocate each business an ERN upon them registering as an employer. This number is individual to your business and is comprised of a three-digit tax office number and a unique employer reference number. It is primarily used by the taxman to identify your business. You may sometimes see it referred to as an ‘employer PAYE reference’.

The ERN will follow one of two formats, either 123/A12345 (If the number was issued prior to 2001), or 123/AA12345 if issued after 2001.

Do I need an ERN?

While most businesses will need an ERN, there are some exceptions. If your business meets the following criteria then you will not be issued with an ERN:

1. If all employees are paid lower than the PAYE tax threshold (currently £11,000 a year)

2. If your businesses does not have a tax presence in the UK (e.g. if it is registered in the Channel Islands)

3. If the business does not have any employees. (It is important to remember that if you are the owner of a limited company you will be classed as an employee of the business).

How do I get one?

You will receive your ERN in your welcome pack once you successfully register with HMRC as an employer. The number will also appear on further correspondence you receive from HMRC, and you should also be able to find it on documentation such as payslips, P45 or P60 and tax forms.

What do I need it for?

You will need your ERN regularly throughout the tax year, so once you receive it be sure to put it in a safe place. You will need to provide the ERN when submitting your self assessment tax returns; failure to do this will more than likely lead to your self assessment being rejected.

Your employees may also request the ERN number if they apply for things such as student loans or tax credits.

You must also provide your ERN when purchasing Employers’ Liability (EL) insurance.

What if I have lost my ERN?

If you have lost the number provided to you, check back over any correspondence you have received from HMRC relating to PAYE, as it should be on there. It will also appear on any P45s or P60s for previous or current employees.

If this is not successful, get in contact with HMRC who should be able to confirm your ERN. Bear in mind that it will be resent by post and may therefore take some time to arrive, so don’t leave this until the last minute.

If there is not any record of your ERN it may be that you are not actually registered as an employer. If this is the case, but you are employing someone, you must rectify this situation as a matter of urgency as you could be employing people illegally.

Handpicked Accountants can connect you with a trusted and qualified accountant in your area. They’ll be able to offer you the advice you need to help grow and develop your business.

David Tattersall
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Hi there - I'm David from Handpicked Accountants. If you need help finding the right accountant, simply give me a call. My expertise is in connecting business owners with the very best professional services and I'm on hand to assist you today.

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