D0 M1 Tax Code - What Is M1?

AnnoyedGuy

Need some help here, as I've been waiting for over 60 minutes on the phone to HMRC to get through to someone with no luck yet. 

My employer's payment system has me on D0 M1. I've done some research, and I think it's correct that I am on D0, but not sure about the M1 which I believe is the emergency tax code?

I think I am paying more in income tax than I should be and I'm pinning it on M1. Every tax calculator (including the MSE one) I've used shows I should be paying a certain amount in tax, and I'm definitely over paying based on this. I've been in my job since July last year, and the M1 has always been there, yet when I log in to HMRC it shows it should be D0 X. I'm not sure what the distinction is between the numbers at the end, but I'm keen to be paying the right amount of tax, especially if I am over paying right now. 

molerat

M1 means each pay period is taken in isolation and not taking the rest of the year passed into consideration as a normal code would. D0X and D0M1 are the same.

D0 means all pay is taxed at the higher rate with no tax free allowance usually on a second income where the first is already at a higher rate - does that apply to you ?  What does your on line account show about your employment(s) ?

[Deleted User]

It is not the emergency tax code. The M1 Is refers to ‘Month 1’ and this means that any salary will have whatever tax code is appropriate applied as if each month was month 1 of the tax year. This prevents, for example, any large claw backs of tax for the previous months of the tax year being collected in one salary payment. D0 (D nought) collects tax at 40% on all taxable salary. The ‘X’ is simply an alternative notation of M1.

Dazed_and_C0nfused

Why do you think you are overpaying?

If you are there is still time in this tax year to get it sorted through your tax code(s) rather than wait for a refund in the summer.

chrisbur

AnnoyedGuy said:

I think I am paying more in income tax than I should be and I'm pinning it on M1. Every tax calculator (including the MSE one) I've used shows I should be paying a certain amount in tax, and I'm definitely over paying based on this. 

I have checked the MSE calculator and listentotaxman.  The MSE one is working fine so long as you put the tax code in correctly.
The middle bit of D0X is a zero not the letter 0.  Listentotaxman also gives the correct answer if you put in D0 in but not if you use the X
However you do not really need a calculator for D0 codes just take the taxable gross ignore any pence and work out 40% of the pounds.

AnnoyedGuy

molerat said:

M1 means each pay period is taken in isolation and not taking the rest of the year passed into consideration as a normal code would. D0X and D0M1 are the same.

D0 means all pay is taxed at the higher rate with no tax free allowance usually on a second income where the first is already at a higher rate - does that apply to you ?  What does your on line account show about your employment(s) ?

Thing is, I only have one source of income. That source of income is on the higher rate. I did HOWEVER technically switch roles at the same company, but now I am getting paid through a subsidiary of that company with a pay bump. Could that cause any issues? 

Dazed_and_C0nfused said:

Why do you think you are overpaying?

If you are there is still time in this tax year to get it sorted through your tax code(s) rather than wait for a refund in the summer.

The tax calculators I've used all show I'm overpaying by about £500 per month, even when I put in the D0 M1 tax code (I hadn't done that before, so that kind of confirms it isn't just the M1 - that thanks to everyone for confirming what that even is. 

chrisbur said:

AnnoyedGuy said:

I think I am paying more in income tax than I should be and I'm pinning it on M1. Every tax calculator (including the MSE one) I've used shows I should be paying a certain amount in tax, and I'm definitely over paying based on this. 

I have checked the MSE calculator and listentotaxman.  The MSE one is working fine so long as you put the tax code in correctly.
The middle bit of D0X is a zero not the letter 0.  Listentotaxman also gives the correct answer if you put in D0 in but not if you use the X
However you do not really need a calculator for D0 codes just take the taxable gross ignore any pence and work out 40% of the pounds.

Yes, that is what I've done now and I've entered it via Listen To The Tax man. It shows I'm roughly paying £500 more in income tax than what I should be. Not sure what it could be. Could not get through to HMRC today. 

Dazed_and_C0nfused

Might be worth checking your Personal Tax Account to see exactly what employments are being reported?

Could be HMRC think two companies are paying you, that might have happened if the new company paid you before the old company told HMRC you had stopped working for them?

AnnoyedGuy

Dazed_and_C0nfused said:

Might be worth checking your Personal Tax Account to see exactly what employments are being reported?

Could be HMRC think two companies are paying you, that might have happened if the new company paid you before the old company told HMRC you had stopped working for them?

I checked and this is correct via the online personal tax account: 

> This employer told us how much you were paid up to 30 June 2020 when your employment with them ended.

This correctly references when I technically ended employment with the previous company I worked with before moving to the newly setup subsidiary. 

That said, it does say "Payroll number: 2" in the online gov.uk portal - assume that is just a reference to  2 diff jobs in the same tax year. Not sure... seems unlikely? 

Speedbird676

Payroll number is your company's payroll/employee number for you.

AnnoyedGuy

Ah makes sense then, I'm not sure at all then. I'll try and give HMRC a call, and hopefully they'll be able to explain it to me. 

molerat

Does it give your tax code on leaving the employment ?