What Is A Tax Reference Number and How Does It Work?
Your company has several numbers and codes that go on official documents. Different HMRC departments issue them to identify your company. Let’s figure out which one means what.
Unless you’re lucky enough to have a photographic memory, keeping track of all the tax reference numbers and codes related to your business can be tough — let alone figuring out what they all mean.
Let’s help you get to grips with all those reference numbers — what they look like, where you’ll find them, and what they’re all for. We’ll clear up how your Tax Reference Number differs from a Unique Taxpayer Reference number, and why they’re both needed to keep you on HMRC’s good side.
What’s My Company Tax Reference Number for, and Why Is It So Important?
Just like different departments make up the average company, several departments also make up HM Revenue and Customs. Each deals with a separate financial obligation your company might carry, such as TIN number, corporation tax, VAT, company tax returns, and expenses. These reference numbers allow the various sectors of HMRC to identify you — a far more manageable, more secure system than identifying your company by name alone.
If you plan on starting a business in the UK, knowing the various reference numbers assigned to your company will help your operations run smoothly. It’ll also help you avoid delays or mishaps when dealing with HMRC — which could, in turn, lead to late fees and fines.
Your tax reference number is made up of ten digits. It consists of three digits, followed by seven numbers or letters.
For example, it might look something like this:
321/XY12345
The first three digits of this number are related to the tax office responsible for your company. The remaining seven digits are unique to your company.
This tax reference number, sometimes called a tax office reference number, has your employees’ National Insurance numbers linked to it. They can provide HMRC with their NI number if they need to find this tax office reference number.
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Will My Tax Office Reference Number Ever Change?
In short, no. Your company’s tax office reference number will stay with your company throughout its life span.
Employees of a company will be assigned their company's tax reference number when they join the company. They could work under several different tax office reference numbers throughout their career, but only as they move from company to company.
PAYE & Tax Reference Numbers: Don't Let These Codes Confuse You
That payday feeling is great, right? Especially when you’re getting paid the right amount — or ensuring your employees are taking home what they deserve. That’s where employer PAYE reference numbers and tax codes come in handy.
Unique Taxpayer Reference (UTR)
Don’t confuse your company's unique taxpayer reference number with your tax office reference number. They’re about the same length, but their purpose is worlds apart.
Your company UTR is a ten-digit code unique to your business. Following your company’s incorporation, Companies House will let HMRC know that your small business is up and running. Hurrah! Within the next two weeks, a letter will arrive at your business’s registered address with your unique taxpayer reference number.
HMRC also issues UTRs for individuals. They are called the same and are both 10 digits long, but your company’s UTR and your own are different.
Anything involving tax will rely on you providing HMRC with this number. Sole traders will need to give HMRC this number when filing their Self Assessments, and every business — limited companies and sole traders — will have to provide their UTR when claiming a tax refund.
Don’t stress if you can’t find your UTR; HMRC can help.
Employer PAYE Reference Number & Where To Find It
An employer PAYE reference number, also called your employer reference number (ERN), is given to any business that hires employees and is set up for PAYE. You may be able to reduce your SME’s taxable income if you only have a few employees.
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You should register for the Pay-As-You-Earn scheme if any of your employees are paid over £123 a week, there are expenses or benefits, or your employees have another job or a pension.
Ann works in a bookshop on weekdays, and in a cafe on weekends. So she receives 2 sets of payslips and payroll papers that contain different PAYE reference numbers — one for the cafe, the other one for the bookshop.
The ERN consists of three digits which, again, represent the HMRC office dealing with your company, followed by several letters or numbers. It’s usually ten digits — but there are always exceptions. It’ll look something like this:
Employees might need to know your ERN when applying for student loans or tax credits. They’ll be able to find this number on their payslips or their annual P60 form — this form details what an employee has been paid throughout the year before tax deductions (gross pay), and how much tax and National Insurance they’ve paid throughout the year. You’ll need to give every employee one of these forms in April of each year. If your employee has received any taxable benefits, like private medical insurance, they’ll also be able to find the ERN on their P11D form.
Business owners will be able to find their employer PAYE reference number on any letter between HMRC and themselves when registering for PAYE. If you can’t find any of those letters, take a look at a past or present employee’s P60 or a past employee’s P45 form. Here’s a list of what each PAYE form means.
Justin has six staff working in his own design agency. When he first registered as an employer, HMRC sent an employer’s welcome pack which included a PAYE reference number. After his first year’s office anniversary, one of his staff decided to resign. He ensured that he had placed the Employer PAYE Reference Number on P45 for his previous staff.
Tax Code
A tax code indicates how much each employee is taxed during a pay period. It will change depending on income, such as when you enter a higher tax band. Every employee set up on your payroll will have a tax code. They’ll be able to find it on their payslip. It helps you, as their employer, to know how much income tax they need to pay. It’s a short code made up of numbers and letters.
To figure out an employee’s correct tax code, ask them to provide the P45 form they received when they finished at their previous company, or ask them to fill out a New Starter Form.
As an employer, it’s your responsibility to keep track of the Income Tax everyone on your payroll pays, and pay it on their behalf.
What Are Common Tax Codes in the UK?
Some tax codes are more common than others, but they can differ depending on where you live and work in the UK, or if you’re married and your partner transfers you some of their personal allowance. Take a look at the tax rates and thresholds here.
1257L is the most common UK tax code. If you have one job, no untaxed income, unpaid tax, or taxable benefits, this is most likely your tax code.
You can find a full breakdown of what your tax code numbers and letters mean here.
Account Tax Reference Number
This one is issued by HMRC at the same time as they issue Employer PAYE Reference number. Account Office Reference Number is a 13-digit number needed when paying HMRC the PAYE liabilities. Your employees won’t receive any documents that contain this number.
If you’re unfamiliar with Account Office Reference Numbers, it’s made up of the three-digit numbers of your tax office, two alpha characters and 8 numeric characters. Here’s an office reference number example: 123PA0045678X. If you need to verify your office reference number, you can use this online HMRC checker.
So, does it mean that the office reference number and Employer Reference Number are the same? Oh no — they’re not the same. Although HMRC issues both of these numbers to you when you register your business, they function differently. Office reference numbers are used for security checks when you make PAYE payments and check your PAYE. Employer Reference Numbers are used when you complete your end-of-year PAYE return and access tax codes, or register to receive email reminders about PAYE.
Bear in mind that entering the wrong account office reference number in your PAYE return form could cause Real Time Information (RTI) submission failures at HMRC. This could delay your information getting to your HMRC account and result in a penalty. Double-check that you’ve entered the correct account office reference number. Have a chat with one of our accountants if you’re a little confused.
VAT Registration Number
As you can guess from the title, the VAT number is issued by HMRC for businesses when they register for Value Added Tax. The UK VAT registration number is a unique ID that has 9 digits with a prefix of ‘GB’. This number can be found in all the submitted VAT reports and on VAT certificates.
A Note on VAT Returns
VAT payment due dates might be every month, every quarter (3 months), or every year — you get to choose how long your VAT period will be.
In short, it goes on any correspondence from HMRC in relation to VAT. Also, you need to show the VAT registration number on any VAT invoice you issue for your customers, including the simplified ones. We can help everything run smoothly with your VAT registration.
If you provide goods or services to customers in any EU country, the EU VAT registration number will be different from the UK as they have their own unique ID. You can check HMRC for the list of ID formats from EU countries. The VAT rules have changed slightly since Brexit — take a look at this article to see whether it affects your business.
After receiving your VAT registration number from HMRC, you will find the VAT registration number in the top right-hand corner of the letter.
Similarly, when your supplier sends an invoice, look out for their VAT registration number. If their company is VAT-registered, they should have listed their unique ID on all their invoices.
If you’re concerned that a company’s VAT registration number doesn’t look valid, run a VAT registration number check. For instance, you may have paid VAT to your supplier but the VAT registration number that they have provided is invalid. In this case, you will need to contact them. You will need to have their valid VAT registration number in order to reclaim your VAT.
As you begin to trade with different businesses either in the UK or wider Europe, it is important to bear in mind that reclaiming a VAT without a valid VAT registration number will lead to HMRC rejecting your claim. In this case, you may have to pay the bill, or be met by a mountain of paperwork. Nobody wants that.
Here Are the Important Things To Remember
- Each reference number holds a unique purpose.
- Your company tax office reference number will always stay the same, and the first three digits relate to the tax office dealing with your company.
- Your company Unique Taxpayer Reference number will be given to you when you incorporate your company. You’ll see it on corporation tax payment reminders and tax returns.
- An employer PAYE reference number is given to businesses with employees who qualify for PAYE. It goes on all payroll papers handed out to employees and submitted to HMRC.
- A tax code helps you know how much income tax each of your employees needs to pay in a pay period.
- A VAT Registration number begins with the prefix ‘GB’ and should go on any VAT invoice, and any letters to HMRC related to VAT.
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