What is M1 Tax Code? Decoding The UK’s Emergency Tax Codes

If you’ve noticed "M1" on your payslip next to your tax code, it may have raised a few questions. M1 is one of the UK’s emergency tax codes, and while it isn’t permanent, it can result in employees temporarily paying more tax than they should.

Understanding what the M1 tax code means and what to do if you’re on it is essential for both employees and employers. Here’s everything you need to know.

What is an M1 Tax Code?

The M1 tax code is an emergency tax code used by HMRC when they don’t yet have complete information about a new employee’s previous earnings or tax details. The "M1" stands for "Month 1", which means tax is calculated on a non-cumulative basis, as if it’s the first month of the tax year, regardless of when it actually is.

This can result in higher tax deductions, especially if the employee has already used some or all of their annual personal allowance elsewhere during the year.

When Is the M1 Tax Code Applied?

You might find yourself or your employee on an M1 tax code in the following scenarios:

• Starting a new job without a P45 or prior tax details

• Changing jobs mid-year, and the new employer hasn't yet received tax information

• Switching from self-employment to PAYE

• Returning to work after a career break

The emergency code is temporary and meant to be corrected once HMRC receives the proper details.

How Does It Affect Tax Payments?

When on M1, tax is calculated based only on the current month’s earnings, without accounting for:

• Tax already paid earlier in the tax year

• Cumulative earnings

• Any unused personal allowance

This could mean you pay more tax upfront, though it will usually be refunded in future months once your code is updated.

How to Resolve an M1 Tax Code

For employees:

1. Provide your P45 from your previous employer to your new employer.

2. If you don’t have a P45, complete a Starter Checklist (previously P46).

3. Check your payslip regularly to see if your tax code changes after HMRC receives updated information.

For employers:

• Submit accurate payroll data to HMRC via Real Time Information (RTI).

• Update the employee’s tax code as soon as instructed by HMRC.

• Inform employees about any changes or updates to their code.

Many businesses rely on payroll professionals to ensure accurate tax coding and timely submissions. For instance,

Payroll Services in Manchester offers expert support to help businesses stay compliant with HMRC, avoiding errors and overpayments.

How Long Does M1 Last?

The M1 code is typically updated by HMRC within 1–2 pay periods, provided the correct information has been submitted. Once updated, the employee’s cumulative earnings and tax contributions are taken into account, and any overpaid tax is usually refunded through the payroll system.

Conclusion

The M1 tax code is a temporary measure used by HMRC when your tax details are missing or incomplete. While it can result in higher tax deductions for a short time, it's easy to resolve by submitting the correct documents. Employers should ensure prompt and accurate payroll submissions to prevent prolonged use of emergency tax codes.

Understanding your payslip and keeping an eye on your tax code can help avoid surprises—and ensure you don’t overpay the taxman.

Senior Accountant in Accounting Farms in the UK