0T M1 taxcode

0T M1 tax code used for 2nd leavers payment

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Made 2 payments using 0T M1 tax code in same tax year. Payroll has looked at previous taxable pay and tax paid, calculated tax on full amount then deducted what tax they have paid. This is more than what they would have paid if taking the current payment into account. Is this correct. When the 2 payments are added together and checked with hmrc tax calc it is correct. 

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By FactChecker
23rd Nov 2023 21:17

I've no idea what you mean by "This is more than what they would have paid if taking the current payment into account."

In essence, a tax code/status of '0T M1' means for each payment to which it applies:
1. there is zero (£0) free pay available for this PAYE calculation;
2. the calculation uses 'this period' values only (not cumulative YTD ones).
This tax code/status is usually only temporary until HMRC has enough information to issue the right code for the employee.

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Replying to FactChecker:
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By cjm0706
24th Nov 2023 10:23

Thank you for your response.

For example:
P06 a payment made for 5000 on 0T M1 tax = 1371.67.
P08 a further 10,000 payment made on 0T M1 tax should be 3371.67.

However what payroll has done is added the two amounts together i.e. 15,000 and calculated tax on that amount = 5600.25, deducted tax already paid on 5000: 5600.25-1371.67, tax due is 4228.58. I was expecting the tax for this period to be 3371.67. Is this correct?

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By Not Anonymous
23rd Nov 2023 22:01

I can only think the non-cumulative element isn't set in the payroll software as FactChecker is spot on with the explanation of it being for pay in that pay period only.

But HMRC won't be issuing a new code for an employment that has ended, 0T, on a non-cumulative basis, is the correct code for that scenario.

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