Register first. You normally register as an employer with HMRC when you start employing staff — even if you only employ yourself, for example as the sole director of a limited company. You must register before the first payday to get your employer PAYE reference, and you cannot register more than 2 months before you start paying people. Most limited companies can register online.
Two references come back. The employer PAYE reference (the ERN) is in two parts — the HMRC office number (the first 3 digits) plus the employer PAYE reference (the letters and numbers after the slash) — and both are reported on every FPS and EPS. The Accounts Office reference has the format 123PA00012345 (13 characters) and is the reference you use when you pay HMRC.
PAYE Online switches on automatically. Register online and you are auto-enrolled for PAYE Online; HMRC posts an activation code within 10 days, and you must activate within 28 days of the letter or re-enrol. If the reference has not arrived by payday, HMRC's workaround is to run payroll, store the full payment submission, and send a late FPS once the reference comes through.
Register as an employer — before the first payday, and not more than two months early
The trigger is employing people. GOV.UK's guidance is direct: "You normally need to register as an employer with HM Revenue and Customs (HMRC) when you start employing staff, or using subcontractors for construction work." The duty does not depend on having a workforce — "You must register even if you're only employing yourself, for example as the only director of a limited company." A one-person limited company still needs a PAYE scheme.
The timing is bounded on both ends. You must register before the first payday to get your employer PAYE reference number, which HMRC "will be sent to you in a letter." And you "cannot register more than 2 months before you start paying people" — so there is a two-month window, opening at most two months out and closing at the first payday. Register too early and the system will not take you; leave it too late and the reference may not reach you in time (see the late-FPS workaround below).
For most companies the mechanics are light. GOV.UK states plainly that "most limited companies can register online" — the same online route that, as we will see, auto-enrols you for PAYE Online. That single online registration is what starts both references and the activation clock moving.
- Register as an employer with HMRC — normally when you start employing staff (or using CIS subcontractors); even a sole director must register. Do it before the first payday, and no more than 2 months before you start paying people. Most limited companies register online.
- HMRC issues your employer PAYE reference (the ERN) by letter — the HMRC office number (first 3 digits) plus the employer PAYE reference after the slash.
- HMRC issues your Accounts Office reference — the 13-character 123PA00012345 payment reference — after you have registered.
- PAYE Online auto-enrols when you register online; HMRC posts an activation code within 10 days, to be activated within 28 days of the letter date.
- If the reference is late, run payroll, store the FPS, and send a late full payment submission once it arrives — do not delay paying the employee.
The two references you get: employer PAYE reference (ERN) and Accounts Office reference
Registration produces two identifiers that are easy to confuse and do opposite jobs — one names your scheme on your submissions, the other names your payments when you pay HMRC.
The employer PAYE reference — widely called the ERN (Employer Reference Number) — is a two-part reference. HMRC's reporting guidance sets it out: the "HMRC office number" is "the first part of your employer PAYE reference (3 digits)", found on the letter HMRC sent you when you registered (and also on P6 or P9 coding notices); and the "employer PAYE reference" proper is "the second part of your employer PAYE reference (the letters and numbers after the slash)." Both parts are reported on every submission you make to HMRC — see the ERN-usage section below.
The Accounts Office reference is the payment-side identifier. HMRC describes its shape and origin: "Format '123PA00012345'. You'll get this from HMRC after you've registered as an employer. It's available online if you pay electronically." It is a 13-character reference, and it is the one you quote when you actually pay HMRC. HMRC's payment guidance spells that out: "You'll need to use your 13-character accounts office reference number as the payment reference," which you can find "in your HMRC online account if you've enrolled for PAYE online" or "on the letter HMRC sent you when you registered as an employer."
The employer PAYE reference / ERN (office number + reference after the slash) identifies your PAYE scheme — it goes on your submissions and statutory forms. The Accounts Office reference (13 characters, 123PA00012345) identifies your payments — it is the reference HMRC matches money against. Quote the wrong one when paying and the payment can go unallocated even though the scheme is perfectly valid.
PAYE Online: auto-enrolment, the 10-day code and the 28-day clock
PAYE Online is the HMRC service you use to run the scheme day to day — checking what you owe, paying HMRC, viewing tax codes and notices, and receiving late-reporting and late-payment alerts. GOV.UK sets out the three steps: "To use PAYE Online, you need to: register as an employer; enrol for PAYE Online; activate the service."
The good news for anyone who registered online is that step two is done for you. "If you registered as an employer online — You are automatically enrolled for PAYE Online when you register as an employer online." What is left is activation, and it is governed by two hard timings: "After you've registered, HMRC will send you an activation code within 10 days by post. You must activate your account within 28 days of the date on the letter. If you do not activate your account in time, you will have to enrol for PAYE Online again." Miss the 28-day window and you are not locked out — but you have to start the enrolment over, which costs time you may not have before payday.
What an offshore employer can do remotely
An overseas employer can carry out the core registration remotely: the same online route applies, and GOV.UK confirms "most limited companies can register online" (the service is also available in Welsh). What trips up offshore employers is assuming that employing a UK worker automatically pulls them into UK registrations it does not. Two record-backed points are worth separating out.
First, on the PAYE tax side, HMRC's manual is explicit that "we would not regard an overseas employer as having a tax presence in the UK simply because there are employees in the UK." Where a foreign employer has no UK presence and no UK address from which earnings are paid, the operating duty can flip to the employee, who runs a direct-payment scheme — a DPNI scheme, where "the employee is responsible for setting up a DPNI scheme and pays both PAYE Income Tax and National Insurance (NI) to HMRC under the one PAYE reference." Whether PAYE attaches to you at all is a threshold question covered in full in running UK payroll from overseas.
Second, Companies House registration is a separate axis — triggered by a UK place of business, not by employing someone. GOV.UK: "You must register if you set up a place of business in the UK or if you usually carry out business from somewhere in the UK … If you do not have a base in the UK — You do not need to register with Companies House." Where it does apply, registration is by form OS IN01, sent within 1 month of opening for business, with a £124 fee (current at the time of writing). Employing a UK homeworker with no office trips none of this on its own.
If the reference hasn't arrived by payday: run payroll and send a late FPS
Because you must register before the first payday and the reference arrives by post, there is a real risk it does not reach you in time. HMRC gives an explicit workaround rather than telling you to delay pay. GOV.UK: "To pay an employee before you get your employer PAYE reference number, you should: Run payroll. Store your full payment submission. Send a late full payment submission to HMRC." In other words: pay the employee on time, keep the FPS you cannot yet file, and submit it late once the reference lands. The employee is paid on schedule; the reporting catches up.
GOV.UK's register-employer guidance states the timing rules — register before the first payday, not more than 2 months early, reference sent by letter — but it does not commit to a precise number of working days for the PAYE reference letter to arrive. We could not verify a specific day-count against GOV.UK for this guide, and figures seen elsewhere conflicted, so treat the arrival time as uncertain and register as early in the two-month window as you can. What is stated is that the PAYE Online activation code arrives within 10 days by post. Check GOV.UK's live tool for the current expected letter time.
What the ERN is used for
The employer PAYE reference earns its "Employer Reference Number" nickname by turning up everywhere your scheme is identified. The verified, day-to-day use is reporting: both parts of the reference — the HMRC office number and the employer PAYE reference — are among the details you report to HMRC on every Full Payment Submission (FPS) and Employer Payment Summary (EPS). That is the reference HMRC uses to tie each submission back to your scheme.
Beyond RTI, the ERN commonly appears on the statutory pay documents your payroll produces — the P60 year-end certificate and the P45 leaver form both carry it. It is also widely cited as a required field for Employers' Liability insurance — but we could not verify that specific insurance use against a GOV.UK source for this guide, so treat the insurance requirement as a widely-reported convention rather than something confirmed here, and check with your insurer or HSE guidance. Whatever the downstream use, the reference itself is the one HMRC issued you at registration: office number, slash, employer reference.
Day one on the employment-law side: the written statement of particulars (ERA 1996 s.1)
Registration is the tax-and-payments plumbing; there is a parallel duty on the employment-law side that also bites at the very start. Under section 1 of the Employment Rights Act 1996, an employer must give a worker a written statement of employment particulars — and since 6 April 2020 it is a day-one right. The statute: "Where [a worker] begins employment with an employer, the employer shall give to [the worker] a written statement of particulars of employment," and the core particulars "must be included in a single document" and the statement "must be given not later than the beginning of the employment."
The required particulars include the names of employer and worker, the start date and continuity date, the rate and method of pay and the pay intervals, hours and days of work (including any variability), holiday entitlement and holiday pay, sick pay, other paid leave, pensions and other benefits. It is not the employment contract — but it is a legal minimum that has to be handed over on the first day, so it belongs in the same start-of-employment checklist as your PAYE registration.
Where this sits in the UK payroll picture
Registration is the gate everything else runs through. The references it issues feed straight into your reporting: every payday you file the FPS (and, where needed, the EPS) covered in statutory lodgement under RTI, quoting the ERN, and you pay HMRC against the Accounts Office reference. The deductions those submissions report — Income Tax, National Insurance and the workplace-pension line — are in PAYE, National Insurance & auto-enrolment. The outputs the ERN appears on, and the records you must keep behind them, are in payslips & records. If you are an overseas employer weighing whether any of this attaches to you at all, start with running UK payroll from overseas, and for the roster of bodies you will deal with, see the UK payroll authorities. The full sequence starts from the United Kingdom payroll hub.
Quick answers
In what order does a new UK employer register for PAYE, and by when?
You register as an employer with HMRC — normally when you start employing staff, or using subcontractors for construction work, and you must register even if you only employ yourself, for example as the only director of a limited company. You must register before the first payday to get your employer PAYE reference number, which HMRC sends to you in a letter, and you cannot register more than 2 months before you start paying people. Most limited companies can register online, and registering online automatically enrols you for PAYE Online. Registration yields two references — the employer PAYE reference and the Accounts Office reference — and HMRC then posts a PAYE Online activation code within 10 days. GOV.UK's register-employer guidance states the timing rules but does not commit to a precise number of working days for the reference letter to arrive, so allow time before your first payday.
What two reference numbers does registering as an employer give you, and what is each for?
Two. The employer PAYE reference — also called the ERN, or Employer Reference Number — comes in two parts: the HMRC office number, which is the first 3 digits, and the employer PAYE reference, which is the letters and numbers after the slash. Both parts are reported in every Full Payment Submission (FPS) and Employer Payment Summary (EPS) you send HMRC. The Accounts Office reference has the 13-character format 123PA00012345 and is the reference you use when you pay HMRC — for example as the Direct Debit reference. You can find the Accounts Office reference in your HMRC online account once you have enrolled for PAYE Online, or on the letter HMRC sent you when you registered as an employer. In short, the ERN identifies the PAYE scheme on your submissions; the Accounts Office reference identifies your payments.
What is PAYE Online, and how do you activate it?
PAYE Online is HMRC's service for checking what you owe, paying HMRC, viewing your tax codes and notices, and getting late-reporting and late-payment alerts. To use it you need to register as an employer, enrol for PAYE Online, and activate the service. If you registered as an employer online, you are automatically enrolled for PAYE Online when you register. HMRC then sends you an activation code within 10 days by post, and you must activate your account within 28 days of the date on the letter. If you do not activate your account in time, you will have to enrol for PAYE Online again.
Can you pay someone before your employer PAYE reference arrives?
Yes. HMRC's stated workaround is to run payroll, store your full payment submission, and send a late full payment submission to HMRC once your employer PAYE reference comes through. This matters because you must register before the first payday to get the reference, and GOV.UK's register-employer guidance does not commit to a precise number of working days for the letter to arrive. So if the reference has not reached you in time for the first payday, you run the payroll, keep the FPS, and send it late — rather than delay paying your employee. Most limited companies can register online in the first place, which is what starts the reference and the PAYE Online enrolment moving.
Both HMRC references on one employer record, collected in the order the law issues them and wired into every submission and payment
Ledra Pay's UK country pack holds the employer PAYE reference (ERN) and the Accounts Office reference on a single employer record, stamps the ERN onto every FPS and EPS, and quotes the 13-character Accounts Office reference on every payment to HMRC — so the scheme identifier and the payment identifier never get crossed. Register online, activate PAYE Online inside the 28-day window, and if the reference is running late the run still goes out on time with the FPS held and filed late, exactly as HMRC prescribes.
See UK coverage →Government sources
- GOV.UK — Register as an employer ("You normally need to register as an employer with HMRC when you start employing staff, or using subcontractors for construction work"; register even if only employing yourself as the only director of a limited company; "You must register before the first payday to get your employer PAYE reference number … sent to you in a letter"; "You cannot register more than 2 months before you start paying people"; "Most limited companies can register online"; the pay-before-reference workaround — "Run payroll. Store your full payment submission. Send a late full payment submission to HMRC").
- GOV.UK — What payroll information to report to HMRC ("HMRC office number — The first part of your employer PAYE reference (3 digits)"; "Employer PAYE reference — The second part of your employer PAYE reference (the letters and numbers after the slash)"; "Accounts Office reference — Format '123PA00012345'. You'll get this from HMRC after you've registered as an employer"; both parts of the employer PAYE reference reported on the FPS and EPS).
- GOV.UK — Pay employers' PAYE: Direct Debit ("You'll need to use your 13-character accounts office reference number as the payment reference"; found "in your HMRC online account if you've enrolled for PAYE online" or "on the letter HMRC sent you when you registered as an employer").
- GOV.UK — PAYE Online for employers ("To use PAYE Online, you need to: register as an employer; enrol for PAYE Online; activate the service"; "You are automatically enrolled for PAYE Online when you register as an employer online"; "HMRC will send you an activation code within 10 days by post. You must activate your account within 28 days of the date on the letter. If you do not activate your account in time, you will have to enrol for PAYE Online again").
- GOV.UK — Register as an overseas company ("You must register if you set up a place of business in the UK or if you usually carry out business from somewhere in the UK … If you do not have a base in the UK — You do not need to register with Companies House"; form OS IN01, within 1 month of opening for business, £124 registration fee — the place-of-business trigger is separate from employing a UK worker).
- GOV.UK — PAYE Manual PAYE81610 — employers' 'presence in UK' ("we would not regard an overseas employer as having a tax presence in the UK simply because there are employees in the UK"; PAYE is territorially limited to employers with a UK "tax presence").
- GOV.UK — PAYE Manual PAYE20100 — DPNI scheme (direct payment) ("The employee is responsible for setting up a DPNI scheme and pays both PAYE Income Tax and National Insurance (NI) to HMRC under the one PAYE reference"; applies to, among others, an employee of a foreign employer with no UK address from which earnings are paid).
- legislation.gov.uk — Employment Rights Act 1996, section 1 (Statement of initial employment particulars) ("Where [a worker] begins employment with an employer, the employer shall give to [the worker] a written statement of particulars of employment"; the s.1(3)–(4) particulars "must be included in a single document" and "the statement must be given not later than the beginning of the employment" — the day-one / single-document rule in force 6 April 2020).
Related
Whether PAYE even attaches to a non-resident employer, the tax-presence test, and the DPNI/DCNI direct-payment fallback.
The FPS and EPS you file every payday under Real Time Information — quoting the ERN the registration issued you.
The Income Tax and National Insurance deductions your scheme reports, plus the workplace-pension duty.