W1 And M1 Tax Codes
- MAZ
- Jul 12
- 14 min read
Updated: Sep 2
The Audio Summary of the Key Points of the Article:
Understanding W1 and M1 Tax Codes
What Are W1 and M1 Tax Codes, and Why Do They Matter?
Let’s kick things off with the basics. If you’ve spotted W1 or M1 on your payslip, you’re likely dealing with what HMRC calls an “emergency tax code.” These are temporary codes slapped on when HMRC doesn’t have the full picture of your income—think starting a new job, transitioning from self-employment, or picking up a company pension.
W1 stands for “Week 1” (for weekly-paid folks), and M1 means “Month 1” (for monthly-paid workers). They’re non-cumulative, meaning your tax is calculated only on that pay period’s earnings, ignoring what you’ve earned or paid in tax earlier in the year. For the 2025/26 tax year, the standard emergency code is 1257L W1 or 1257L M1, reflecting the £12,570 personal allowance. Why does this matter? Because these codes can lead to overtaxing, leaving you with less take-home pay than you deserve.
How Do W1 and M1 Differ from Standard Tax Codes?
Now, let’s clear up the confusion. Most people in the UK are on the standard 1257L tax code, which means you can earn £12,570 tax-free annually, spread evenly across your pay periods (roughly £1,048 monthly or £242 weekly). This code is cumulative, so it accounts for your year-to-date earnings and taxes. W1 and M1, on the other hand, are non-cumulative. Imagine your payroll as a recipe: a cumulative code is like adding ingredients gradually, adjusting as you go, while W1/M1 is like starting fresh each time, ignoring the mix you’ve already made. This can lead to overtaxing if you start a job mid-year, as HMRC assumes each pay period’s income is your norm, not factoring in earlier low or no earnings.
Why Does HMRC Use Emergency Tax Codes?
So, why does HMRC stick you with W1 or M1? It’s their way of playing it safe when they lack your full income details. Common triggers include:
Starting a New Job: If you don’t provide a P45 from your previous employer, HMRC can’t see your prior earnings or tax paid.
Self-Employment to Employment: Transitioning from freelancing (where you handle taxes via Self Assessment) to PAYE.
New Income Sources: Starting a pension or company benefits (e.g., a company car) mid-year.
Missing Information: If your employer fails to send HMRC your details promptly.
For example, take Siobhan from Bristol, who switched jobs in September 2024 without a P45. Her new employer applied 1257L M1, assuming her £2,500 monthly salary was her norm. HMRC taxed her as if she earned £30,000 annually, ignoring her five jobless months earlier in the year. Result? She paid £294 in tax on her first payslip, when a cumulative code would’ve meant £0 (as £2,500 is below £6,285, her five-month allowance). Siobhan’s case shows how W1/M1 can sting if not corrected quickly.
What Are the 2025/26 Tax Rates and Allowances?
Let’s get into the nitty-gritty numbers for the 2025/26 tax year, as set by HMRC. The personal allowance remains £12,570, meaning you pay no tax on income up to this amount. Beyond that, tax bands kick in:
Basic Rate: 20% on income from £12,571 to £50,270.
Higher Rate: 40% on £50,271 to £125,140.
Additional Rate: 45% on income above £125,140.
If you’re on W1/M1, these rates apply to your pay after deducting the weekly (£242) or monthly (£1,048) portion of your allowance. For Scottish taxpayers, codes start with “S” (e.g., S1257L M1), and rates differ (e.g., 21% starter rate for £12,571–£14,876). Welsh taxpayers use “C” codes, but rates align with England’s for 2025/26. These figures are critical because W1/M1 codes don’t adjust for earlier untaxed income, potentially pushing you into a higher tax bracket temporarily.
When Do W1 and M1 Codes Get Applied?
Picture this: you’re starting a new gig, and your employer doesn’t have your P45. HMRC slaps on a W1 or M1 code to ensure some tax is collected while they sort out your details. This typically happens in:
Job Transitions: No P45 or delayed employer reporting.
Pension Withdrawals: Taking a taxable lump sum, where HMRC assumes it’s a recurring payment.
Gig Economy Shifts: Moving from platforms like Uber to a PAYE job.
Administrative Hiccups: HMRC’s system lagging (up to 35 days to update, per GOV.UK).
These codes are meant to be temporary, but if your employer doesn’t submit your P45 or you don’t update HMRC, you could be stuck on them until the tax year ends (5 April 2026). That’s why checking your payslip regularly is a must.
Practical Impacts and Solutions for W1 and M1 Tax Codes
How Do W1 and M1 Tax Codes Affect Your Pay?
Now, let’s talk about the real-world hit to your wallet. W1 and M1 tax codes can shrink your take-home pay because they don’t account for your earnings history in the tax year. Say you’re paid monthly and earn £3,000 in June 2025 on a 1257L M1 code. HMRC gives you £1,048 (1/12 of the £12,570 personal allowance) tax-free, then taxes the remaining £1,952 at 20%, taking £390.40. If you were on the standard 1257L code and hadn’t worked earlier in the year, you’d have a larger allowance built up (e.g., £3,142 for three months), meaning less tax or none at all. This non-cumulative approach often leads to overtaxing, especially if your income varies or you’ve had gaps in employment. For weekly-paid workers on W1, it’s the same story—just scaled to a £242 weekly allowance.
Why Might You Be Overtaxed, and How Much?
Let’s break it down with a scenario. Imagine Tariq from Leeds, who starts a new job in October 2025 after three months unemployed. His new salary is £36,000 (£3,000 monthly), but his employer uses 1257L M1 due to a missing P45. Each month, he’s taxed £390.40 (20% of £1,952). On a cumulative 1257L code, his six-month allowance (£6,285) would mean no tax until his total earnings exceed this, saving him £1,171.20 over three months. This overtaxing is common with W1/M1, particularly for:
New Starters: Mid-year job changes without a P45.
Low Earners: Those earning below £12,570 annually but taxed as if they earn more.
Pensioners: Taking lump sums mistaken as regular income.
The table below shows potential overtaxing for a £2,500 monthly earner in 2025/26:
How Can You Fix an Incorrect Tax Code?
Be careful! If you’re stuck on W1 or M1, don’t assume it’ll sort itself out. HMRC usually updates your code within 35 days if they receive your P45 or P60, but delays happen. Here’s a step-by-step guide to take control:
Check Your Payslip: Look for W1 or M1 on your payslip or P60. Compare your tax deducted to what a cumulative code would yield (use HMRC’s calculator at www.gov.uk/check-income-tax-current-year).
Gather Documents: Find your P45 (from your last job) or P60 (year-end summary). If you don’t have them, ask your previous employer.
Contact Your Employer: Ensure they’ve sent your details to HMRC. Provide your P45 if you have it.
Reach Out to HMRC: Call 0300 200 3300 or use the online Personal Tax Account (www.gov.uk/personal-tax-account). Provide your National Insurance number, employment history, and income details.
Request a Refund: If overtaxed, HMRC can adjust your code mid-year or issue a refund after 5 April 2026 via Self Assessment or a P800 form.
Monitor Updates: Check payslips monthly to confirm the code changes to 1257L (or another appropriate code).
For example, Aisling from Cardiff noticed her M1 code in November 2024 after starting a £28,000 job. She called HMRC, provided her P45, and had her code updated to 1257L within two weeks, saving £200 monthly. Acting fast is key.
Can You Claim a Tax Refund?
Now, here’s the good news: if W1 or M1 has you overpaying tax, you can claim it back. HMRC typically issues refunds automatically via a P800 form after the tax year (by July 2026 for 2025/26), but you can speed things up. Log into your Personal Tax Account, submit income details, and request an in-year adjustment. Refunds depend on:
Total Income: If your annual earnings are below £12,570, you’re likely due a full refund.
Tax Paid: HMRC compares tax paid under W1/M1 to what you’d owe on a cumulative code.
Timing: Mid-year fixes adjust future payslips; end-of-year refunds come as a cheque or bank transfer.
Here’s a quick table for refund scenarios (2025/26, monthly earner):
What About Niche Scenarios Like Pensions or Gig Work?
Now consider this: if you’re a pensioner or gig worker, W1/M1 can get tricky. For pensioners, taking a lump sum (e.g., £10,000 from a defined contribution pension) might trigger an M1 code, taxing it as if it’s monthly income (£120,000 annually). This could push you into the 40% or 45% tax bracket, costing thousands. In 2024, retiree Gwilym from Swansea faced this, paying £2,000 tax on a one-off £10,000 withdrawal. He contacted HMRC, clarified it was a lump sum, and reclaimed £1,800 via a P800.
Gig workers transitioning to PAYE jobs also face issues. If you’ve driven for Uber and then take a salaried role, HMRC might not have your Self Assessment data yet, defaulting to W1/M1. This happened to Priya from Manchester in 2023, who overpaid £900 in tax when her £25,000 job started mid-year. She submitted her Self Assessment early, linking it to her PAYE record, and got a refund by March 2024.
How Can You Avoid W1/M1 Issues in the Future?
None of us wants to deal with tax headaches, so let’s talk prevention. To dodge W1/M1 traps:
Submit Your P45 Promptly: Hand it to your new employer on day one.
Update HMRC: Use the Personal Tax Account to report job changes or new income sources.
Check Payslips: Spot W1/M1 early and query your employer or HMRC.
Plan Pension Withdrawals: Consult a financial advisor to avoid lump-sum tax shocks.
File Self Assessment Early: If you’ve mixed PAYE and self-employment income, submit by October 2025 for 2024/25 to align records.
By staying proactive, you can keep your tax code accurate and your pay packet intact. For instance, Ewan, a contractor in Glasgow, avoided overtaxing in 2025 by updating his Personal Tax Account before starting a PAYE job, ensuring a smooth transition to 1257L.
Summary and Key Takeaways for W1 and M1 Tax Codes
What Are the Most Critical Points to Remember?
Now, let’s wrap this up with the essentials you need to know about W1 and M1 tax codes. Whether you’re a taxpayer or a business owner, these points will help you stay on top of your tax situation and avoid costly surprises. Below are the ten most important takeaways, distilled into clear, actionable insights based on the 2025/26 tax year rules and real-world scenarios.
Key Takeaways for UK Taxpayers and Business Owners
W1 and M1 are emergency tax codes: These non-cumulative codes (1257L W1 for weekly pay, 1257L M1 for monthly pay) tax only the current pay period’s earnings, ignoring prior income or tax paid in the 2025/26 tax year.
They’re triggered by incomplete information: HMRC applies W1/M1 when they lack your full income details, such as starting a new job without a P45, transitioning from self-employment, or taking a pension lump sum.
Overtaxing is a common risk: Because W1/M1 don’t account for year-to-date earnings, you could pay more tax than needed, especially if you’ve had low or no income earlier in the year.
The 2025/26 personal allowance is £12,570: This tax-free amount is split evenly (£1,048 monthly or £242 weekly) under W1/M1, which can lead to higher tax deductions compared to the cumulative 1257L code.
You can fix incorrect codes quickly: Check your payslip, provide your P45 to your employer, and contact HMRC via their helpline (0300 200 3300) or Personal Tax Account to update your code within 35 days.
Refunds are available for overpaid tax: If W1/M1 causes overtaxing, HMRC can adjust your code mid-year or issue a refund via a P800 form after 5 April 2026, especially if your annual income is below £12,570.
Pensioners face unique challenges: Lump-sum pension withdrawals may be taxed as regular income under M1, potentially pushing you into higher tax brackets (40% or 45%) unless clarified with HMRC.
Gig workers need proactive steps: Transitioning from self-employment to PAYE can trigger W1/M1; filing Self Assessment early (e.g., by October 2025 for 2024/25) aligns your records and prevents overtaxing.
Regular payslip checks are crucial: Monitor your tax code monthly to catch W1/M1 early and avoid prolonged overtaxing, especially after job changes or new income sources.
Prevention saves headaches: Submit your P45 promptly, update your Personal Tax Account with job or income changes, and consult advisors for pension or mixed-income scenarios to maintain an accurate tax code.
Why These Points Matter for Your Finances
Let’s be real—nobody wants to lose money to unnecessary tax. These takeaways are your roadmap to understanding and managing W1 and M1 codes. For instance, a business owner like Priya from Manchester, who juggles PAYE and freelance income, can avoid overtaxing by linking her Self Assessment to her PAYE record early. Similarly, a pensioner like Gwilym in Swansea can save thousands by clarifying lump-sum withdrawals with HMRC. The 2025/26 tax year rules, verified via GOV.UK, ensure these insights are current and actionable.
How to Stay Ahead for the Long Term
So, what’s the bigger picture? Beyond fixing W1/M1 issues, think about long-term tax planning. If you’re a low earner (below £12,570), track your income to claim every penny of your allowance. If you’re a high earner or have multiple income streams, consider professional tax advice to optimise your code and deductions. Tools like HMRC’s online calculator (www.gov.uk/check-income-tax-current-year) can help you estimate your tax liability and spot discrepancies early. By staying vigilant, you can turn a temporary tax hiccup into a chance to master your finances.
FAQs
Q1: What is the difference between W1 and M1 tax codes?
A1: The W1 tax code applies to weekly-paid employees, taxing only the current week's earnings with a weekly portion of the personal allowance (£242). The M1 code applies to monthly-paid employees, taxing only the current month's earnings with a monthly portion of the personal allowance (£1,048). Both are non-cumulative, meaning they don’t account for prior earnings in the tax year.
Q2: How long do W1 and M1 tax codes typically last?
A2: W1 and M1 tax codes are usually temporary and last until HMRC receives updated income details, typically within 35 days after a P45 or employer submission, though delays can extend this period.
Q3: Can W1 or M1 tax codes be applied to part-time workers?
A3: Yes, part-time workers can be assigned W1 or M1 codes if HMRC lacks their full income details, such as when starting a new job without a P45, leading to potential overtaxing.
Q4: Do W1 and M1 tax codes affect National Insurance contributions?
A4: W1 and M1 codes only affect income tax calculations, not National Insurance contributions, which are based on earnings thresholds and not influenced by cumulative or non-cumulative tax codes.
Q5: Can someone have multiple tax codes for different jobs?
A5: Yes, if someone has multiple jobs, HMRC may assign different tax codes, including W1 or M1 for a new job, to allocate the personal allowance across employments or tax new income separately.
Q6: What happens if someone stays on a W1 or M1 code for the entire tax year?
A6: Staying on W1 or M1 all year can lead to overtaxing, as the codes don’t adjust for earlier low or no earnings, but a refund can be claimed after the tax year via a P800 form.
Q7: Are W1 and M1 tax codes used for self-employed income?
A7: No, W1 and M1 codes are specific to PAYE income, such as salaries or pensions, and not applied to self-employed income, which is taxed through Self Assessment.
Q8: Can W1 or M1 codes affect tax credits?
A8: W1 or M1 codes may reduce take-home pay, potentially affecting tax credit calculations, as these depend on net income, but the codes themselves don’t directly alter tax credit eligibility.
Q9: How can someone check if their W1 or M1 code is correct?
A9: They can review their payslip for the tax code, compare deductions with HMRC’s online tax calculator, or log into their Personal Tax Account to verify their code and income details.
Q10: Do W1 and M1 codes apply to company directors?
A10: Yes, company directors can be assigned W1 or M1 codes if they start receiving PAYE income (e.g., salary or dividends taxed via PAYE) without prior income details submitted to HMRC.
Q11: Can W1 or M1 codes be applied to benefits in kind?
A11: Yes, if benefits like a company car are added mid-year without updated income details, HMRC may apply W1 or M1 to tax the benefit’s cash equivalent.
Q12: What should someone do if their employer refuses to update their tax code?
A12: They should contact HMRC directly via the helpline (0300 200 3300) or their Personal Tax Account, providing income details and any P45 or P60 to correct the code.
Q13: Are W1 and M1 codes used for Scottish or Welsh taxpayers?
A13: Yes, Scottish taxpayers may have S1257L W1 or M1, and Welsh taxpayers C1257L W1 or M1, with tax rates applied according to their respective tax systems.
Q14: Can W1 or M1 codes lead to underpayment of tax?
A14: Rarely, but if someone’s income is higher than HMRC estimates, W1 or M1 might result in underpayment, which HMRC will recover via a tax code adjustment or P800 form.
Q15: Do W1 and M1 codes affect pension contributions?
A15: W1 and M1 codes don’t directly impact pension contributions, which are based on gross pay, but overtaxing may reduce disposable income available for voluntary contributions.
Q16: Can someone appeal an incorrect W1 or M1 tax code?
A16: There’s no formal appeal process, but contacting HMRC with correct income details (e.g., P45 or employment history) will prompt a review and adjustment of the tax code.
Q17: How do W1 and M1 codes affect tax-free childcare schemes?
A17: W1 or M1 codes may lower take-home pay, affecting eligibility for tax-free childcare, which depends on income levels, but they don’t directly alter scheme calculations.
Q18: Can W1 or M1 codes be applied to agency workers?
A18: Yes, agency workers may receive W1 or M1 codes if the agency lacks their prior income details or fails to submit a P45, leading to temporary non-cumulative taxing.
Q19: Do W1 and M1 codes impact student loan repayments?
A19: Yes, W1 or M1 codes can increase tax deductions, indirectly affecting student loan repayments, which are calculated on gross income above repayment thresholds.
Q20: Can someone request a specific tax code instead of W1 or M1?
A20: They cannot request a specific code, but providing HMRC with accurate income details (e.g., via a P45 or Personal Tax Account) ensures the correct code is applied.
About the Author
Mr. Maz Zaheer, FCA, AFA, MAAT, MBA, is the CEO and Chief Accountant of MTA and Total Tax Accountants—two of the UK’s leading tax advisory firms. With over 14 years of hands-on experience in UK taxation, Maz is a seasoned expert in advising individuals, SMEs, and corporations on complex tax matters. A Fellow Chartered Accountant and a prolific tax writer, he is widely respected for simplifying intricate tax concepts through his popular articles. His professional insights empower UK taxpayers to navigate their financial obligations with clarity and confidence.
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