M1 tax code: what Month 1 means on a payslip

HMRC lists exactly three emergency tax code markers, W1 for weekly pay, M1 for monthly pay and X for irregular pay dates, and the M1 example it gives is a full code such as S875L M1 ^[1]. For the 2026-27 tax year the emergency code for every employee is 1257L, so the most common version on a monthly payslip is 1257L M1 ^[2].

The letters M1 do not change the tax-free amount in the code. They change how payroll uses it. A code followed by M1 is operated on the Month 1 basis, which means each month's pay is taxed as though it were the first month of the tax year, ignoring all earlier pay and tax ^[3]. The employee still receives one-twelfth of the allowance every month, but never the unused allowance from earlier months and never a refund of tax overpaid earlier in the year.

That difference is small for an employee who has worked the whole year on steady pay and large for someone who starts mid-year after a gap, or who overpaid tax in an earlier job. It is also a frequent source of payslip queries, because the employee sees an "emergency" label and assumes something has gone wrong.

This guide explains what the M1 marker means, when employers and HMRC apply it, how the arithmetic differs from the cumulative basis with figures recomputed by a payroll engine, how the marker is reported in Real Time Information, and how and when it is removed.

Key takeaways

• M1 is a suffix, not a code: it tells payroll to operate the code on a non-cumulative, Month 1 basis ^{[3] [4]}.
• On £3,000 a month, 1257L M1 deducts £390.20 of income tax every month, the same as a cumulative code would for a full-year employee on the same pay.
• An employee starting in month 7 with no earlier income pays £0 tax in that month on a cumulative 1257L code, but £390.20 on 1257L M1.
• An employee who overpaid tax earlier in the year receives no refund through payroll while M1 applies; the excess is settled after HMRC replaces the code or at year end ^{[5] [6]}.
• HMRC usually replaces an emergency code once it has details from both employers, which can take up to 35 days from the start date ^[1].
• The marker never carries into a new tax year: employers drop it on 6 April ^[7].

What the M1 marker means

PAYE normally works on the cumulative basis. Each payday, payroll compares the employee's total pay since 6 April with the total tax-free allowance due to date, then deducts the tax due to date minus the tax already taken ^[3]. HMRC describes this as the basis that makes the tax deducted during the year "roughly correct for most cases" ^[3].

Cumulative and non-cumulative in plain terms

The Month 1 basis is the non-cumulative alternative. GOV.UK tells employers that with W1 and M1 codes they must calculate tax "only on what they are paid in the current pay period, not the whole year" ^[4]. The PAYE Manual adds that the basis "ignores previous pay and tax" and that, in effect, "all payments are taxed as though it was week 1 or month 1 of the tax year" ^[3].

The table sets the two bases side by side.

Sources: PAYE Manual ^[3] and Low Incomes Tax Reform Group guidance ^[5].

M1, W1 and X compared

The suffix follows the pay frequency. GOV.UK gives an example of each, and the Low Incomes Tax Reform Group explains that X signals a pay period that is neither weekly nor monthly, such as four-weekly pay ^{[1] [8]}.

GOV.UK's employee page simply describes all three as meaning the person is on an emergency tax code ^[9]. The HMRC employer guide is more precise: 1257L is an emergency code only when it is followed by W1, M1 or X ^[10]. Without the suffix, 1257L is the ordinary cumulative code used for most people with one job or pension ^[9].

When an M1 code is used

An M1 code reaches a payslip by one of two routes: the employer applies it under the new starter rules, or HMRC issues a coding notice that tells the employer to operate the code on a Month 1 basis. The RTI data item guide names both routes as the reasons a code is operated non-cumulatively ^[11].

New starters without a P45

When a new employee brings no P45, the employer uses HMRC's starter checklist. The statement the employee ticks decides the code ^{[12] [13]}.

Source: HMRC starter checklist ^[12].

Statement B is the textbook M1 case. The employee has had earlier pay in the same tax year, but the new employer cannot see it, so giving cumulative allowance would risk handing over allowance that the previous employer already used ^[5]. If a P45 or checklist arrives after the first payday, GOV.UK tells the employer to keep the code from its first Full Payment Submission until HMRC sends a new one ^[13]. The guide to emergency tax codes covers the wider starter process.

HMRC coding notices issued on a Month 1 basis

HMRC also chooses the Month 1 basis itself. Its own staff instructions say a revised code "must be issued on a week 1 / month 1 basis when the revised tax code to be operated is lower", and must always be issued that way when HMRC holds no record of the code already operated ^[14]. The PAYE Manual confirms that an employer must use Week 1 or Month 1 every payday where previous pay and tax details are unavailable or the cumulative basis does not apply for another reason ^[15].

The logic is protective. When a lower code is issued mid-year on a cumulative basis, the employer would have to recover in one month all the extra tax for the months already paid. Operating the lower code on M1 avoids that sudden deduction and leaves any shortfall to be settled through an in-year adjustment or at year-end reconciliation ^{[16] [14]}. A code reduced by underpaid tax can turn into a K code, explained in the guide to the K tax code.

Payments after an employee leaves

The Month 1 basis also governs payments made after a P45 has been issued. The RTI data item guide tells employers to use code 0T (S0T for Scottish taxpayers) on a week 1 or month 1 basis, and to set the payment-after-leaving indicator on the submission ^[11]. GOV.UK's letters table confirms that 0T deducts tax from all income with no Personal Allowance ^[4]. The 0T tax code guide explains when the zero-allowance code applies more generally.

How the arithmetic differs: worked examples

The figures below were computed with the Moonworkers payroll engine, which implements HMRC's PAYE tax table routines for the 2026-27 tax year ^[17]. All cases use a category A employee in England. The Personal Allowance is £12,570 and the basic rate is 20% ^[18].

Steady pay all year: M1 and cumulative agree

For an employee paid £3,000 every month from April, the two bases produce the same deduction. The engine gives £390.20 of income tax and £156.16 of employee National Insurance each month on both 1257L and 1257L M1, leaving net pay of £2,453.64. Because each month's allowance is used in full every month, there is no unused allowance for the cumulative basis to release ^{[3] [5]}.

This is why many employees on M1 notice nothing unusual. The marker matters only when pay or tax earlier in the year was uneven.

A mid-year starter with no earlier income

The picture changes for someone who earned nothing between 6 April and starting work in month 7. On a cumulative 1257L code, the first £3,000 payslip in month 7 carries £0 of income tax, because seven months of allowance are available against one month of pay; net pay is £2,843.84. On 1257L M1 the same payslip carries £390.20 of income tax and net pay of £2,453.64. The Low Incomes Tax Reform Group describes this effect directly: on an emergency code the person "does not get the benefit of any unused allowance since the start of the year" ^[5].

The extra tax is not lost. Once HMRC replaces the emergency code with a cumulative one, the next payroll releases the unused allowance, or the difference is repaid after the tax year ends ^{[1] [6]}.

An employee who overpaid earlier in the year

Consider an employee taxed on code BR for six months, with £18,000 of pay and £3,600 of tax (the engine's BR figure on that pay), who then moves onto a full allowance in month 7. On a cumulative 1257L code the engine produces a refund of £867.60 through the month 7 payroll, and net pay of £3,711.44 on a £3,000 salary. On 1257L M1 the month 7 deduction is simply £390.20 and nothing is refunded. GOV.UK confirms that someone who has overpaid on an emergency code can claim the money back, which happens outside the payroll ^{[1] [19]}.

The same principle at other frequencies and codes

The non-cumulative rule applies to every code type, which the PAYE routines specification handles as separate routines for suffix, K, BR, D and NT codes ^[17]. For HMRC's own list of letters and prefixes see GOV.UK ^[4].

The weekly W1 case also shows £28.64 of employee National Insurance and net pay of £499.76. The Scottish figure differs because Scottish rates and bands apply to S codes ^[20]. The K code case shows that a Month 1 basis does not switch off the safety net on K codes: the regulatory limit still caps tax at 50% of the period's pay ^[17].

What M1 does not change

The marker affects income tax only. Employee National Insurance for ordinary employees is already worked out on each pay period's earnings against weekly or monthly thresholds, such as the £1,048 monthly primary threshold and the £4,189 upper earnings limit ^[21]. Employer National Insurance follows the same period rules, so a £3,000 monthly salary carries the same NI under 1257L and 1257L M1.

Allowance size and student loans

M1 does not reduce the allowance itself either: 1257L M1 still represents the full £12,570 Personal Allowance, simply given one-twelfth at a time ^{[18] [10]}. Student loan deductions are also calculated per pay period against the plan threshold and are unaffected by the tax code basis ^[22]. For an employer, the practical consequence is narrow but real: only the income tax line of the payslip moves.

How M1 is reported and operated in payroll software

RTI carries the basis on every Full Payment Submission. Data item 56, "Tax Code Basis is non-cumulative", must be set to yes whenever the code is operated on a week 1 or month 1 basis ^[11]. The FPS itself goes to HMRC on or before each payday ^[23].

What payroll software must get right

Mishandling the indicator is a common source of mismatches. If the code is operated on M1 but the indicator is missing, HMRC's records assume cumulative operation and its view of tax due will differ from the payroll's. HMRC's own coding history records the basis of operation for each code, Week 1/Month 1 or Cumulative, which is why the two must match ^{[24] [11]}.

HMRC-recognised software reads the suffix from the coding notice, switches routine, sets the indicator and drops the marker automatically when a cumulative code arrives. Employers running HMRC-recognised payroll software for SMEs see this as a single field on the employee record. Platforms that embed payroll through the HMRC-recognised payroll API pass the code and basis as part of the employee object, and the endpoints are listed in the API documentation.

Bureaux running many schemes

For accountants and bureaux the risk multiplies with client count: a code notice applied to the wrong scheme, or an M1 marker left in place after a cumulative notice arrives, produces a stream of payslip queries. A multi-client payroll dashboard that flags every employee still on a non-cumulative basis makes these cases visible before each payrun. HMRC asks employers to apply any new code as soon as possible and before the employee's next payday ^{[25] [10]}.

How and when the M1 marker is removed

An M1 code ends in one of three ways: HMRC issues a cumulative replacement, the tax year ends, or the employment ends.

Replacement by a cumulative code

HMRC usually updates an emergency code once it has details from both employers, which can take up to 35 days from the start date ^[1]. Once HMRC has the right information it tells the employee and the employer within 15 working days; monthly-paid employees should see the new code on the next or following payslip ^[26]. When the employer updates the record, GOV.UK asks it to add any previous pay and tax that came with the new code, which is what allows the cumulative basis to work out the correct tax to date ^[25]. The PAYE Manual describes this as cancelling Week 1/Month 1 and restoring cumulative treatment ^[15].

The new tax year

Markers never roll forward. GOV.UK tells employers not to carry the week 1 or month 1 part of a code into the new tax year, and HMRC's P9X instructions for codes from 6 April 2026 repeat it: "Do not copy or carry over any 'week 1' or 'month 1' markings" ^{[7] [2]}. HMRC's own staff are told to check that the week 1/month 1 basis is not carried forward at annual coding ^[14].

Settling the balance

Any tax overpaid or underpaid while M1 applied is reconciled after the year ends. HMRC sends P800 calculations between June and March of the following tax year, and one listed cause is being put on the wrong tax code ^[6]. HMRC's in-year adjustments and year-end reconciliation establish the final position for each employee ^[16].

Check a tax code before the next payrun

Before applying a new code, an employer can confirm what the number, letter and suffix mean with the Moonworkers tax code checker, which decodes emergency markers such as M1, W1 and X alongside standard codes.

Conclusion

The M1 marker is one of the smallest pieces of text on a payslip and one of the most misunderstood. It does not take away the Personal Allowance or signal an error by the employer. It switches PAYE from a running total to a month-by-month calculation, which protects HMRC and the employee from large swings when earlier pay is unknown or a code has just been reduced, at the cost of delaying refunds and unused allowance until a cumulative code or year-end reconciliation catches up.

For employers the work is mechanical once it is systematic: apply the code exactly as the notice states, set the non-cumulative indicator on the FPS, add previous pay and tax when the cumulative replacement arrives, and clear every marker on 6 April. As more payroll runs inside HR, accounting and workforce platforms through embedded engines, that mechanical handling increasingly sits in code rather than in a payroll administrator's checklist, which is where an edge case like Month 1 is least likely to slip.

Frequently asked questions

Is 1257L M1 an emergency tax code?

Yes. GOV.UK states that 1257L is an emergency code only when it is followed by W1, M1 or X ^[10]. The M1 suffix means the code is applied month by month, without reference to earlier pay and tax in the tax year ^[4]. The allowance itself is the standard £12,570.

How long does an M1 tax code last?

HMRC usually replaces an emergency code once it has details from both employers, which can take up to 35 days from the start date ^[1]. Some M1 codes are issued deliberately by HMRC and run to the end of the tax year ^[14]. No M1 marker carries into the next tax year.

Does an M1 tax code mean paying too much tax?

Not necessarily. For an employee on steady pay since April, an M1 code deducts the same tax as a cumulative code, because each month's share of the allowance is used in full ^[3]. Overpayment arises when the employee had little or no income earlier in the year, or overpaid in a previous job, because the Month 1 basis gives no unused allowance and no refunds; the excess is repaid once a cumulative code is issued or after the year ends ^[6].

Can an employer change an M1 code to cumulative without HMRC?

No. The employer operates the code and basis that HMRC or the new starter rules require, and switches to the cumulative basis only when HMRC issues a cumulative code or the P45 details allow it ^[15]. An employee who believes the code is wrong should update their details with HMRC, most quickly through the online service ^[26].