Tax Code 0T M1 in the UK – What Does it Mean? (Updated 2024)

Last Updated on: 20th September 2024, 06:23 am

In the UK, tax codes play a crucial role in determining how much tax is deducted from your income. They indicate how much of your earnings should be taxed after accounting for any allowances. One such tax code that many people encounter is 0T M1.

This specific code is often issued in emergency situations when HMRC does not have sufficient information about your income. For the 2024/25 financial year, being placed on tax code 0T M1 means that you may pay more tax than necessary, as it doesn’t provide for any tax-free personal allowance.

In this blog, we will break down the meaning of tax code 0T M1, why it’s used, how it affects your pay, and what steps you can take to correct it.

What is Tax Code 0T?

The tax code 0T means that you are taxed on your entire income without receiving any personal tax-free allowance. In 2024/25, the personal allowance is £12,570. Normally, your tax-free personal allowance is applied to reduce the amount of income subject to tax. However, under 0T, every penny of your earnings is taxed, making it one of the strictest tax codes.

This code is commonly used when:

• You’ve started a new job and haven’t provided your new employer with a P45 or completed a P46.
• You’ve used up your personal allowance.
• HMRC is unsure of your income details.

Since it doesn’t allow for any tax-free earnings, this code often results in higher tax deductions until your tax situation is clarified.

Understanding the “M1” Suffix in Tax Code 0T M1

The M1 suffix stands for “Month 1,” which indicates that the tax code is non-cumulative. Non-cumulative tax codes mean that your tax is calculated based only on your current income for that specific month, without considering previous earnings or taxes paid earlier in the tax year.

• In 0T M1, every month is treated as if it’s the first month of the tax year.
• This method often results in overpayment since no previous allowances or deductions are considered.
• It is typically applied in emergency situations and is intended as a temporary measure.

For example, if you were to start a new job without providing your P45 from your previous employment, your new employer might assign you the 0T M1 tax code until your tax records are updated.

When and Why is Tax Code 0T M1 Issued?

Tax code 0T M1 is issued in several specific situations, particularly when HMRC lacks complete information about your income. Some common reasons include:

• You’ve recently started a new job and have not provided your new employer with a P45.
• You’ve exhausted your personal allowance for the year.
• You’re receiving income from multiple sources (e.g., pensions or second jobs) that HMRC has not fully accounted for.

In the case of a job change, if your new employer doesn’t have the correct details from your previous employer, they will apply this code as a precaution. Similarly, if your tax affairs are complicated and HMRC is awaiting more details, they may use 0T M1 until the issue is resolved.

How Much Tax Do You Pay on 0T M1?

With tax code 0T M1, all of your income is subject to taxation without the benefit of the £12,570 personal allowance for 2024/25. Here’s how the tax breakdown works:

• Basic Rate (20%): Applied to earnings up to £37,700.
• Higher Rate (40%): Applied to earnings between £37,701 and £125,140.
• Additional Rate (45%): Applied to earnings over £125,140.

If you’re placed on 0T M1, your employer will calculate tax only on what you earn in the current pay period, disregarding any tax paid or allowances used in previous months.

Example: If you earn £3,000 a month and are on 0T M1, the entire £3,000 will be taxed, potentially at multiple rates depending on your total annual income.

How to Get Off the 0T M1 Tax Code?

Correcting your 0T M1 tax code is essential to avoid overpaying tax. Here are the steps you can take:

• Submit missing documents: Ensure your employer has your P45 from your previous job or provide updated information to HMRC through a P46.
• Contact HMRC: If your tax code is still incorrect after submitting these documents, you can contact HMRC directly via their online services or by phone.
• Check your tax code: Use HMRC’s online tool to view your current tax code and ensure it’s accurate.

Once HMRC receives the correct information, they will update your tax code, and any overpaid tax may be refunded.

Comparison of Emergency Tax Codes

Conclusion

Being placed on the 0T M1 tax code can have a significant financial impact, particularly because it does not take into account your personal tax allowance, resulting in higher tax deductions. While this tax code is usually temporary, it’s important to address it quickly by ensuring HMRC has all the correct details regarding your income and employment status.

Regularly reviewing your tax code, especially when starting a new job or experiencing changes in your income, can prevent overpayment. If you have been placed on the 0T M1 code for the 2024/25 financial year, take prompt action to correct it and reclaim any excess tax paid.

FAQs About Tax Code 0T M1

What is a 0T M1 emergency tax code?

A 0T M1 code is an emergency tax code that doesn’t allow for any personal allowance and applies only to the current month’s income.

How can I check my current tax code?

You can check your tax code by logging into your personal tax account on the HMRC website.

Why didn’t I receive my personal allowance under 0T M1?

The 0T M1 tax code doesn’t include any tax-free allowance, resulting in all your income being taxed.

How can I avoid being placed on 0T M1 in the future?

Ensure that your employer has all the necessary documentation, such as your P45 or updated tax details, when you start a new job.

Can HMRC correct my tax code automatically?

Yes, HMRC typically updates tax codes automatically once they have all the correct information, but you can also contact them to expedite the process.

Do I need to file a tax return if I’ve been on 0T M1?

Not necessarily, but it’s worth checking if you’ve overpaid tax, which may qualify you for a refund through self-assessment.

Will I get a refund if I was on the wrong tax code?

If you’ve overpaid tax, HMRC will either adjust your future tax payments or issue a refund after the end of the tax year.