What is an ERN? A guide to your PAYE reference number

April 6, 2022

You’ve onboarded your first employee, registered as an employer and have just received your welcome pack from HM Revenue and Customs (HMRC).

In this pack, you’ll find a little number with a lot of significance that’ll come up again and again in your time as an employer — your Employer Reference Number (ERN).We’ll be going through everything you need to know about your Employer Reference Number, from what it is and where to find it, to why you need it and how you can get one.

What is an ERN & what does it look like?

Your Employer Reference Number, otherwise referred to as an employer PAYE reference number on tax forms, is a unique set of letters and numbers assigned to your business by HMRC to identify your company.This reference number is made up of a 3-digit HMRC office number, and a combination of between 1 and 10 letters and numbers. These two numbers are separated by a forward slash (/), and can look like the following:123/AB4567

When do I need my ERN?

Your employer PAYE reference number will be needed for the following situations:

Completing your end-of-year Pay As You Earn (PAYE) return

Employee tax credit and student loan applications

Buying employers’ liability insurance

End-of-year PAYE return

Filling out your end-of-year PAYE return is just one of the many statutory reporting obligations you’ll have as a business owner, yet an invalid or missing ERN can result in your return submission getting rejected.In fact, an invalid or missing ERN is one of the most common reasons HMRC reject end-of-year PAYE returns, so make sure you have your employer PAYE reference number close to hand when filling out your paperwork.Since your ERN is HMRC’s way of identifying your business, without this number on your paperwork there’s no surefire way for HMRC to associate what you’ve filed with your business. Rather than risk filing your end-of-year PAYE return against the wrong business, HMRC will reject the return altogether, leaving you open to late filing penalties if a properly filled out return is not submitted before the deadline.

Employee usage

If an employee approaches you asking for your Employer Reference Number, don’t be alarmed. If an employee is applying for tax credits, Universal Credit or a student loan, they’ll need their employer’s PAYE reference number for their application.To make this more streamlined for both you and your employees, you might consider adding your ERN to your employees’ payslips.

Employer liability insurance

Legislation introduced in April 2012 means you now need to declare your ERN when registering for employer’s liability insurance (EL) — and since having EL is a legal requirement, having your ERN close to hand when applying is recommended.The reason your ERN is so crucial to your EL application comes down to what happens when a claim is made. Since claims can be made years after the event has taken place, it’s crucial for the body handling the claim — the Employers’ Liability Tracing Office (ELTO) —to establish everywhere the employee has previously worked.To avoid wasting time trawling through piles of paperwork, ERNs are used to make finding both the employer and the employer’s relevant insurer at the time a more streamlined process, saving time for both the claimant and insurer.

Are there instances I won’t need an ERN?

Since employer PAYE reference numbers are only given to employers registered for a PAYE, there are a few cases where businesses won’t receive an ERN:

Businesses where all employees are earning less than £123 a week, do not have a second job and are not receiving a pension

Businesses registered outside England, Scotland, Northern Ireland or Wales (for example in the Channel Islands and the Isle of Man)

Businesses without employees

How do I get an ERN?

You’ll receive your employer PAYE reference number in your welcome pack from HMRC when you register as an employer.You’ll need to register for an ERN when you start building a team at your company or start hiring subcontractors for construction work. If you’re a limited company director, you’ll need to register the company as an employer — even if you’re the only person at the company.Make sure you register as an employer well before your first payday since it can take up to 5 days for your ERN to arrive in the post. You can register up to 2 months before the first payday, but no earlier than that.

For a step-by-step guide on how to register as an employer, check out our piece Registering as an employer: A business owner’s guide for all you need to know on getting started as an employer.

If you want to pay your employees before you receive your ERN, you can run payroll, but you’ll need to store your full payment submission (FPS) and send a late full payment submission to HMRC.

Can I have more than one ERN?

Since an ERN identifies a single business it’s rare to have more than one ERN at a time, but not unheard of.If your company operates several PAYE schemes across a number of different locations, you might find yourself with an ERN for each scheme.To keep out of trouble with HMRC, you’ll need to hold onto each ERN, making sure you use the correct one with each correspondence.

Where can I find my ERN?

You can find your ERN in the following places:

In the yellow booklet in your welcome pack by HMRC when you first registered as an employer

On any payslips, P45s, P60s or P11Ds issued to previous or current employees

On correspondence with HMRC on matters regarding PAYE

What if I don’t have an ERN?

If you can’t find an ERN on any correspondence you’ve had with HMRC, it’s likely you haven’t registered as an employer.If you’ve hired people and are paying them more than the PAYE tax threshold (£123 a week for 2022/23), or if they hold a second job or are receiving a pension, you’ll need to register as soon as possible to avoid being fined by HMRC.

If you’re not sure where to start, look no further. At Ember, we can get you registered as an employer with HMRC and set you up with a payroll system that’ll make payday a piece of cake.

Daniel HoganCOO & Co-Founder