P.A.Y.E., National Insurance, Net Wages & Pension Fund: Codes 2210, 2211, 2220 & 2230

Every payroll run deducts money from employees that doesn't belong to the business at all — it's being held on behalf of HMRC, a pension provider, or the employees themselves until payday. These four codes track those short-term liabilities.

The codes, and what each one holds

Code 2210 — P.A.Y.E. holds income tax deducted from employees' pay, due to HMRC.

Code 2211 — National Insurance holds both employee and employer National Insurance contributions due to HMRC.

Code 2220 — Net Wages is a short-lived holding account for wages calculated but not yet paid into employees' bank accounts — it should clear to zero once the payment run completes.

Code 2230 — Pension Fund holds employer and employee pension contributions collected but not yet paid over to the pension provider. All four are Current Liabilities codes and normally carry a credit balance.

A worked example

Say an employee's gross pay for the month is £3,000, with £400 PAYE, £250 National Insurance and £90 pension contribution deducted, leaving £2,260 net pay.

P.A.Y.E. (code 2210): £400 credited.

National Insurance (code 2211): £250 credited (plus separately the employer's own NI contribution).

Pension Fund (code 2230): £90 credited.

Net Wages (code 2220): £2,260 credited, then debited back to zero once the £2,260 payment actually reaches the employee's bank account.

Why this matters day to day

These balances build up between each payroll run and clear down on the monthly HMRC and pension payment dates, so a non-zero balance sitting here at the wrong time of the month is usually a sign something hasn't been paid over yet. Because this is money that legally belongs to HMRC or the pension provider rather than the business, letting these accounts run late is one of the more serious payroll mistakes a business can make.