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.

Real-world examples across industries

Hospitality

A hospitality business with a large casual and part-time workforce runs payroll weekly, posting to all four codes far more often than a business paying monthly. This week's run for 25 staff, with gross wages of £14,500, generates £2,100 of PAYE (credit 2210), £900 employee NI plus £1,050 employer NI — £1,950 credited to 2211 — and, since only a minority of the casual workforce earns above the threshold that triggers automatic pension enrolment, a modest £150 employee plus £110 employer pension contribution, £260 credited to 2230. Net wages of £14,500 − £2,100 − £900 − £150 = £11,350 are credited to 2220, then debited back to zero once the BACS run reaches staff accounts a day or two later. Because 2220 turns over so quickly here, a balance still sitting in it after a few days is a fast signal that a particular week's payment didn't go through.

Professional services

A professional services firm with 8 salaried staff runs payroll once a month instead, for a single larger figure rather than dozens of smaller weekly ones. Gross wages of £57,600 for the month produce £9,600 of PAYE (credit 2210), £2,800 employee NI plus £3,400 employer NI — £6,200 credited to 2211 — and, since nearly the whole team earns above the auto-enrolment threshold, £3,200 employee plus £2,400 employer pension, £5,600 credited to 2230. Net wages of £57,600 − £9,600 − £2,800 − £3,200 = £42,000 are credited to 2220 and cleared with a single monthly BACS payment. Far fewer postings across the year than the hospitality example, so a discrepancy is rarer here — but tends to be larger when one does turn up.

Single-director company

A one-person limited company where the director is the sole employee is specifically excluded from claiming Employment Allowance, so employer NI is paid in full rather than being reduced as it would for a similarly sized business with a second employee. A month's gross pay of £4,500 generates £700 PAYE (credit 2210) and £180 employee NI plus £510 employer NI — £690 credited to 2211. Net pay of £4,500 − £700 − £180 = £3,620 is credited to 2220 and cleared once it reaches the director's account — the same mechanics as any other payroll, just without the relief a bigger team could claim.

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.