What Is a PAYE Reference Number and Where Do You Find It?
Understand the PAYE reference number: what it is, where to locate this key UK tax identifier on your documents, and its importance for employer tax obligations.
A PAYE (Pay As You Earn) reference number is a specific identifier used within the United Kingdom’s tax system. It plays a role in how income tax and National Insurance contributions are collected from employees’ wages. This unique identifier helps link employers to their tax obligations with HM Revenue & Customs (HMRC), ensuring the proper administration of payroll deductions.
Understanding the PAYE Reference Number
A PAYE (Pay As You Earn) reference number, also known as an Employer Reference Number (ERN), is a unique alphanumeric code assigned by HM Revenue & Customs (HMRC) to identify an employer’s PAYE scheme. This number is distinct from an individual’s National Insurance number or tax code, as it specifically identifies the employer’s tax scheme. The reference number typically consists of two parts: a three-digit number for the HMRC tax office (e.g., “123”) and a combination of letters and/or numbers (e.g., “AB45678”) that uniquely identifies the employer. A complete PAYE reference number looks like “123/AB45678”.
Locating Your PAYE Reference Number
For employees, the PAYE reference number is typically present on documents received from their employer or HMRC. It can often be found on payslips, although its inclusion is not a legal requirement, so placement may vary. The PAYE reference number is consistently located on P45 forms, issued when leaving a job, and P60 forms, which summarize annual earnings and deductions. Official correspondence from HMRC concerning employment income or tax coding notices will also display the reference number.
Employers can find their PAYE reference number on various official documents and within their payroll systems. When an employer first registers with HMRC, the number is provided in a welcome pack. Subsequent official letters and emails from HMRC related to PAYE matters, such as coding notices, will also include this reference. Additionally, the PAYE reference number is commonly recorded and accessible within payroll software used by businesses. If direct access to these documents is unavailable, an employer’s accountant or payroll provider would also have this information.
The Purpose of the PAYE Reference Number
The PAYE reference number serves as a central identifier for both employers and HMRC, facilitating the accurate and efficient collection of employment taxes. For employers, this number is essential for submitting Real Time Information (RTI) reports to HMRC. These reports include Full Payment Submissions (FPS), which detail employee earnings and deductions each payday, and Employer Payment Summaries (EPS), used for reporting reclaimable amounts like statutory pay or Construction Industry Scheme (CIS) deductions. The reference number ensures that tax and National Insurance contributions deducted from employees’ salaries are correctly attributed to the specific employer’s scheme when paid to HMRC. It is also necessary for all communications with HMRC regarding the employer’s PAYE scheme.
HMRC uses the PAYE reference number to precisely identify individual employers and manage their tax affairs. This unique identifier enables the tax authority to process tax payments, track employee earnings, and monitor compliance with tax regulations. It allows HMRC to link employees’ tax records to their respective employers, which is crucial for applying correct tax codes and ensuring accurate tax calculations.
Obtaining a New PAYE Reference Number
New employers must obtain a PAYE reference number by registering with HMRC. This registration is a legal requirement for any business that employs staff in the UK, including limited company directors paying themselves. The process typically involves registering online via the HMRC website, and it should be completed before the first payday for employees.
During the online registration, basic information about the business is required, such as the type of business, contact details, and the intended start date for the PAYE scheme. HMRC will then issue the unique PAYE reference number, usually within 15 working days of registration. It is advisable to register in advance, though employers can run payroll and store submissions to send later if the number isn’t received before the first payday.