Employer Reference Number

Employer reference number

Why do I now need these when taking out Employers Liability Insurance and where can I find it?

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.

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 onto.
 
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.

As a result of impending legislative changes, you will also now need to declare your ERN when purchasing Employers Liability Insurance. This is required to identify at which firms an employee has worked in the event of a claim significantly after the event – for example in the case of claims for asbestosis. 

The Employers’ Liability Tracing Office (ELTO) is an independent industry body comprising members who are Employers Liability (EL) insurers.
 
The ELTO is an independent industry body comprising members who are Employers Liability (EL) insurers. It is a proactive move by the insurance industry to meet its obligations to help those who have suffered injury or disease in the workplace identify the relevant insurer quickly and efficiently. At the heart of this process is a centralised database – the Employers’ Liability Database (ELD) – which will contain all new and renewed EL insurance policies, old EL policies that have new claims made against them and all successful traces from the current Tracing Service. ELTO’s members will be required to supply policy data to the ELD on all new and renewed EL policies from 1 April 2011. The ELD will be accessible for claimant searches from this data via www.elto.org.uk and will be used to trace EL policies.

Why is there a requirement for the ERN (Employer PAYE reference)?

The ELD’s ability to provide enquirers with successful trace results will be supported by establishing a unique identifier for each employer on the database. ELTO has adopted the Employer Reference Number (ERN) as the most effective unique identifier available. This is also commonly referred to as ‘Employer PAYE Reference’. Members will be required to supply the ERN to the ELD.

On the Motor Insurance Database (MID), the vehicle registration number is the unique identifier that enables searches to identify the appropriate data record. The ERN will perform a similar function on ELD.

Do all companies have an ERN (Employer PAYE reference), if not who is exempt?

UK businesses employing one or more people are required to have the ERN, which is the reference number for their employees’ income tax and national insurance contributions. A tiny minority of employers do not have an ERN.

The only exemption is where the employer pays all their employees below the PAYE threshold (£503.00 monthly).

What are the timescales for getting the ERN (Employer PAYE reference) loaded onto the database?

From April 2012, ELTO members will be required to supply all subsidiary names as well as the Employer Reference Number (ERN) for the policyholder and all subsidiaries for all new and renewed policies. In preparation for this, members will begin to collect this information from April 2011.

Will brokers be able to use ELTO to trace policies for their insurers?

The purpose of ELTO is to provide claimants with information to help them trace an EL insurer. However, as with the current tracing service, brokers will also be able to use the service where their insurer is facing a specific claim and they need to identify their former insurer.

What if I have lost my ERN?

It is important that you keep hold of you 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 of which you have copies.

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.

If you would like any further advice regarding your Employers Reference Number or indeed any aspect of your liability or business insurance requirements, for a free review contact David Wilson on 01244 520844 or 07970 304169.    (Email: david@nevillejones.com)