Tax Reference Number and Unique Taxpayer Reference

Dealing with self assessment tax and tax compliance can be a real headache sometimes, and the minefield of terminology doesn’t always make things any easier. This is especially true when terms may sound very similar but entail important differences that are vital when it comes to getting your finances in order with the taxman.

A recurring example is the confusion between ‘Tax Reference Number’ and ‘Unique Taxpayer Reference’. These terms can be especially confusing for those that are self-employed as well as being employed elsewhere, or receiving a pension, as those unfortunate souls will have to deal with both codes on a regular basis.

Let’s help clarify these terms and highlight how they differ. 

What is a Tax Reference Number?

A Tax Reference Number is sometimes referred to using the abbreviation ‘TRN’ and is assigned to employers and pension providers.  The number itself includes an initial 3 numbers that are used to identify the specific taxation office responsible for dealing with this business’s tax affairs. The remainder of the ‘number’ includes a series of numbers and letters which are used to locate the business itself. Your Tax Reference Number will be found on any correspondents you receive from your employer or pension provider, such as payslips, end-of-year P60 forms, and even a P45 form.

Naturally, if you have more than one employer, or more than one pension, you will have more than one Tax Reference Number. Conveniently, you can use each number to identify your financial information regarding each one of your employments and pensions. It’s a good idea to have file, be it physical or stored online, where you keep these numbers and codes safe that can be called upon whenever you need to interact with the HMRC or your employer.

What is a Unique Taxpayer Reference?

Your Unique Taxpayer Reference (UTR) is assigned to each person or company working or operating as sole trader, self employed, director or landlord under UK taxation. It is used by HMRC to identify individuals and individual businesses, with their financial records for tax purposes. They are like a barcode by functioning as a taxman’s key to unlocking financial information – it even looks like a barcode with 10 randomised numbers followed by the letter K. The reference is located on all personal communications with HMRC, including previous tax return forms, and on the SA250 form used to declare self-employment.

Your Unique Taxpayer Reference is used for all communications with HMRC that include disclosure of your personal circumstances but is more frequently used by those that are self-employed for completing their self-assessment tax returns. They are also needed when you appoint an accountant or an online accountant, so they can work on your behalf.  A UTR is essential if you plan on registering for tax online, and you will be sent a special activation code so that filling in returns online each year is much simpler. Like all codes and passwords, don’t share it with anyone except your designated bookkeeper.

The Difference between Tax reference Number and Unique Taxpayer Reference

 Now that these two confusing terms have been put under the microscope, it is much easier to see how they differ in their appearance, location, function, and who they are more likely to be assigned to.

Here is an outline of their differences in a nutshell:

  • Whilst the Tax Reference Number is found on most – if not all – correspondents from employers and pension providers and will be displayed on payslips, P 45 and P 60, your Unique Taxpayer Reference will be found on communications with HMRC
  • Tax Reference Numbers are for employer registration with HMRC and assigned to businesses and pension providers – although they do appear on their employees and customers’ documentation for convenience. A Unique Taxpayer Reference however, is assigned to each individual and individual business.
  • The main, and the most important difference, is the function of these tax references. A Tax Reference Number is used by HMRC to access the PAYE records of a business or pension provider and locate the office responsible for dealing with employee tax affairs. On the other hand, a Unique Taxpayer Reference is used so HMRC can access all individuals’ self assessment tax records.
  • Their appearance can be a big clue in helping you source the correct code. A Tax Reference Number comprises of 3 numbers to identify the responsible taxation office and a series of characters to identify the employer or pension provider. In comparison, your Unique Taxpayer Reference is a combination of 10 digits and possibly ending in a letter K.

Now that we have ironed out these differences, it is easy to see why people can find them so frustrating and confusing. Nevertheless, spending some of your time to understand taxation terminology can be a huge relief when taking on your next self-assessment declaration, or communicating with HMRC in the future.

If you are an employer and need help maintain payroll, we are specialist accountants for payroll management and can advice you on compliance of PAYE. Calls us today to discuss how we can save you on the costs and do proper compliance.

If you are self employed, sole trader, director or land lord or have an income which must be taxed under self assessment, we have specialist team of accountants to deal with your quires and compliance issues. Call us today for free and no obligation advice.

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