M1 Tax Code ? Why it happens and how to Fix it
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If you’ve ever opened your payslip and spotted M1 next to your tax code, you’ve likely wondered why your income tax suddenly seems higher. You’re not alone. The M1 tax code catches thousands of people every year, usually right after starting a new employment or when HM Revenue doesn’t yet have your full income details.
Think of M1 as HMRC’s “temporary holding pattern.” It keeps taxes flowing while they gather the information they need to calculate the correct information or correct tax code for your tax situation. The downside? You might pay more tax than necessary until things are updated. It’s always wise to contact HMRC or tax experts like MMBA Accountants to handle all your tax worries.
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What Your Tax Code Really Does
Your tax code tells your employer how much tax to pay from your wages each current pay period. Most people have 1257L, which reflects the standard personal allowance (£12,570). With the appropriate code, your employer cuts only the right amount of tax, no more, no less.
But when HMRC is missing information, like your income from a previous employment or your civil partner’s income, they can’t safely apply your full tax-free allowance. That’s when emergency codes like 1257L M1 step in.
Why Emergency Tax Codes Exist
Emergency tax codes are not a punishment; they’re a safety mechanism. HMRC uses tax codes when they’re unsure how much you’ve already paid in tax this year.
Tax codes happen when:
- You transfer to a new job without a P45
- You entered the wrong statement on your starter form
- You switch jobs quickly
- Your employer sends incomplete payroll data
- You begin receiving a state pension, secondary earnings, or income from a self-employed role
How the M1 Tax Code Works
M1 tax code stands for Month 1. Instead of spreading your or your spouse’s tax-free personal allowance across the full tax year, you only get one month’s worth. Everything resets every month as if it were the first month of the year.
Here’s why tax code matters for you and your business:
Under a normal tax code (cumulative)
HMRC looks at your total income from April to now, considers the unused allowance, and adjusts tax fairly across the year for your account.
Under M1 emergency tax code (non-cumulative)
HMRC looks at your total income from April to now, considers the unused allowance, and adjusts tax fairly across the year for your account, which is similar to how the Simple Assessment Tax Scheme works.
A Simple Example
Let’s say, there is a circumstance where you start a new employment in October and are entitled to £2,500 a month for service in the UK.
How to Tell If You’re on the Wrong Tax Code
Check the latest payslip entitled to you. If your tax code ends with:
…you’re on a non-cumulative emergency tax code. You might also see 0T M1, which means you haven’t yet been granted your personal allowance at all. But do not worry, its only temporary.
Why New Jobs Trigger the M1 Emergency Tax Code Most Often
Starting a new job is the number one reason that makes you eligible for an M1 emergency tax code. Here’s why:
- Your previous employer hasn’t sent your final paid data
- Your employee’s P45 is missing or delayed
- Your new employer uses the wrong starter declaration
- HMRC hasn’t yet matched your National Insurance number
- Circumstances, as you moved from Northern Ireland or another UK region, and records need syncing
Until HMRC is confident about your full taxable income for the tax year, they’ll err on the side of caution.
How to Fix an M1 Tax Code | 5 Ways
Most people only stay on M1 for a month or two, and HMRC updates the code automatically. But if it lingers, here’s what to do:
1. Give your employer your P45
This often resolves the issue instantly.
2. Check your starter form
Check the correct statement (A, B, or C)
3. Update your details on the HMRC app
Your Personal Tax Account makes it easy to review jobs, benefits, and pensions, and add more details.
4. Call if it still hasn’t updated
The HMRC helpline is 0300 200 3300 and have your payslip, employer name, and NI number details ready. You can call support and ask about rebates, costs, or if you get more allowances.
5. Watch your payslip for the corrected code
Once set right, the emergency tax stops right away, and any extra money or expenses you paid come back to you as a rebate.
Conclusion
The M1 tax code looks bad, but it is just a short-term thing until your total income picture details are clear. It doesn’t mean you’ve done anything wrong, and it won’t affect you long-term. Once your code updates, your tax payment balance is out, and any extra you paid comes back to you.
The key is simple: Check your first few payslips after starting a job. If you see M1, claim it to be sorted early.
FAQs
When Company Benefits Affect Your Code?
If your job includes company benefits, for example, like a car, medical insurance, or other taxable benefits, our tax code basic rate is adjusted. If these benefits are added late or changed mid-year, your tax code may be temporarily incorrect.
Does the M1 Tax Code Apply to Self-Employed People?
No. If you’re self-employed, you don’t use PAYE tax codes at all. You pay tax through Self Assessment. However, if you’re both self-employed and employed, your PAYE job can still receive an M1 code.
How the State Pension Can Trigger an Emergency Code?
Your state pension is taxable, but pension payments don’t deduct tax automatically. Your tax code is adjusted based on your wages or private pension to collect what you owe.
How much income tax will I pay if I’m on the M1 tax code?
You get one month’s worth of your tax-free personal allowance on M1. Because your allowance isn’t spread across the whole tax year, you may pay more income tax than usual. The exact amount is calculated based on your monthly salary, benefits, and whether the M1 code removes any unused allowance you had earlier in the year.
Will You Get a Tax Refund?
Almost certainly, if you overpaid. Refunds usually come through your employer’s payroll once HMRC issues the correct tax code. If not, you will get a P800 tax calculation after the tax year ends. You can also claim early online.
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