Tax Reference Number: Meaning, Types, Uses, and Importance

Tax reference numbers are a crucial element in the lives of taxpayers. These allow tax authorities, such as HM Revenue & Customs (HMRC) in the UK, to accurately track and identify the tax liabilities of taxpayers. Understanding the importance of these tax reference numbers helps tax authorities and payers manage the tax regulations, and associated risks of fraud and mismatching. 

Let’s learn more about what does tax reference number means, why taxpayers and authorities need it, its types, uses, and where to find these numbers. 

What is a Tax Reference Number?

The tax reference number is a unique identifying number issued by His Majesty’s Revenue and Customs (HMRC) to record tax records of taxpayers. People usually refer to its various types, like PAYE reference, Unique Taxpayer Reference (UTR), and Taxpayer Identification Number (TIN).

The following are the documents where you can find your tax reference number:

• Email: The tax reference number can also be found on any emails or communications your employer sends you regarding your job.

• Payslip: You can find your tax reference number on the payslip provided by the employer.

• P60: Employers provide tax office reference numbers on P60 to each employee at the end of every tax year. This document contains the amount you were paid throughout the tax year, the amount you paid in national insurance and income tax, along with your tax reference number.

• P45: If you no longer work for your employer, the tax reference number will show on your P45, a tax document given to employees at the end of their employment.

The tax reference number consists of three digits, followed by a collection of digits, letters, or both. The first three digits of the tax reference number indicate the tax office in charge of that specific employer. The remaining portion of the tax reference identifies the employer. 

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Importance of Tax Reference Numbers

Tax authorities use tax reference numbers to identify, track, and control the tax responsibilities of individuals or entities. The following are several reasons why tax reference numbers are important.

• Identification and Tracking: Tax reference numbers provide taxpayers with a unique identity, allowing tax authorities to track tax liabilities, payments, and other relevant information about the taxpayers. This ensures that records are correct and in compliance with the law.

• Tax Filings: To properly file tax returns, both individuals and corporations need their tax reference numbers. It guarantees that the tax return and any connected transactions are linked to the right taxpayer.

• Preventing Fraud: In tax-related matters, tax reference numbers help to reduce the risk of fraud or identity theft. Authorities verify taxpayer identities through these numbers, allowing them to not mismatch taxpayer information.

• Audit and Investigation: Tax reference numbers are extremely important during tax audits and inquiries. Tax authorities use taxpayers’ tax reference numbers to check whether tax codes comply with tax rules and regulations or not.

• Employment and Payroll: Employers also use tax reference numbers to accurately report employees’ earnings to HMRC for income tax purposes, making sure that payroll taxes are correctly calculated.

Types of Tax Reference Number

The tax reference number is a general term commonly used interchangeably with all tax reference numbers. Therefore, here we have provided detailed information about the types of reference numbers. 

• Taxpayer Identification Number (TIN): It is an 11-digit unique number assigned to businesses and individuals. It is assigned by the IRS in the United States.

• Unique Taxpayer Reference Number (UTR): UTR number issued by HMRC to individuals and businesses who need to file a self-assessment tax return. If you have already registered, your UTR will be mentioned in several HMRC documents, such as SA250 or welcome to Self Assessment letter, account statement, HMRC app, tax return notice, previous Self Assessment tax returns, and reminders of payment.

• Value Added Tax Number (VAT): A VAT number is an identification number that is used for all VAT purposes in the country. It allows tax authorities to monitor the flow of goods and the tax burdens imposed on trading firms.

• Employer Identification Number (EIN): An employer’s unique identification number, or employer identification number (EIN), is provided to a company so that the Internal Revenue Service (IRS) can quickly identify it. Employers often need EINs to report income taxes.

• National Insurance Number (NINO): The National Insurance Number is another unique identifying number that ensures taxpayers’ taxes and National Insurance contributions are only recorded in their names. This two-letter, six-digit number remains the same for the entire life of a taxpayer. For Example, RA123456D. 

• Social Security Number (SSN): Social Security Number (SSN) helps tax authorities record your earnings and determine your eligibility for Social Security benefits and certain government services. Many financial institutions, such as banks and credit companies, also ask for your number when you open an account.

Where to Find Your Tax Reference Number?

There are times when we forget our tax reference numbers and are unable to recall how to get them. Here, we have provided sources where you can find your tax reference numbers. 

If you apply for tax self-assessment or register a limited company, a UTR number will be generated immediately. It comes in the mail ten days after registration. You’ll find your 10-digit number in correspondence from HMRC, typically located in the upper right corner of letters of your UK tax. It is available on:

• Personal tax account.
• The HMRC app.
• Previous tax returns.
• Notice reminders from HMRC to file a return or payment.

The following procedures can be used to determine your company’s VAT number:

• VAT Registration Certificate: Your VAT number is on the HMRC-issued VAT registration certificate. This certificate should be kept somewhere accessible and secure.

• VAT Returns: In case, you don’t have a VAT registration certificate on hand or can’t locate one, you can find your VAT number on the VAT returns. The VAT number is included in the VAT return form you submit to HMRC.  

• Get in touch with HMRC: You can get help from HMRC if you can’t find your VAT number. Contact the VAT telephone number at 18001 then 0300 200 3700. Furthermore, you can also contact HMRC online via the new live chat feature, which has taken the role of the email approach.

• Accounting Software: Your VAT number may be included in the program settings if you track your financial transactions using online accounting software.

Do the following to find your Employer Identification Number (EIN).

• The easiest method to find your Employer Identification Number (EIN) is to consult the IRS. The IRS will email you a letter confirming your EIN once your application is approved. 
• Or, you can check your previous tax returns, loan applications, bank account documents, licenses, and permits to find the same.

You can find out your National Insurance Number (NINO) by using the methods listed below:

• Your National Insurance number can be found on any record you currently own, such as a payslip, P60, or letters about benefits.
• Your personal tax account also has your National Insurance number.
• A letter with your National Insurance number can also be downloaded using the HMRC app or your personal tax account.
• Your National Insurance number is located in your Apple or Google Wallet, if you have stored it there in the past.

To find your Social Security Number (SSN), follow these steps.

• Even if an individual is not permitted to work in the United States, their name and Social Security number are placed on the front of all Social Security cards.
• Speak with anyone who may be familiar with your Social Security number. When an individual’s SSN is first issued, it is typically requested by a parent or legal guardian.
• Verify whether your SSN appears on any tax records, including previous W-2s, 1099s, or tax returns. Your SSN can also appear at the top of certain bank statements and investment account summaries.

Conclusion

Comprehensively understanding tax reference numbers is crucial for the calculation of the tax obligation. Whether a Unique Taxpayer Reference Number, Taxpayer Identification Number, Value Added Tax Number, or Social Security Number, these numbers are essential for accurate tax filings, preventing fraudulent tax activities, auditing, investigation, employment, and payroll computation.

Taxpayers access these tax reference numbers through their personal tax account, HMRC app, contacting the IRS, and several other sources.