tax code 0T-M1 meaning

[angelsx7and9]

I would like some information and clarity regarding the tax code 0T-M1. My employment ended on 17th May 2017 after being on sick leave for more than 3 years. I'm currently in receipt of ESA (contributions- based) and PIP. I was advised that my entitlement is 12 weeks' notice pay and 1 1/2 years A/L pay - is this right?

 

Received a P45 last week which shows the tax code as being 0T-M1, which I have never seen before, and I have noticed that nearly half of the total notice pay, has been deducted for income tax. Is this correct? Seems a very excessive amount!

 

Confused

angelsx7and9

 

I would greatly appreciated the Caggers help on this matter

[sgtbush]

Tax code ot-m1 is you pay tax on all of your income

[BazzaS]

0T : no monthly allowance before tax is due, so tax paid on all income.

 

M1: "month one basis applies", though with no allowance I'm not sure there is much difference between '0T-M1' (also seen as '0TX') and just '0T'

 

https://www.gov.uk/tax-codes

[TaxHero]

I think whats happened here is as follows.

 

You were paid your final salary and received your P45.

 

You then received pay after your P45 which was your holiday pay. All pay made after the P45 is taxed as 0T W1M1.

 

You can claim the tax back online.

 

Your employer has followed the correct procedure,

[angelsx7and9]

Hi Tax Hero,

Thank you very much for your reply. The sequence of events detailed below may suggest otherwise, but please feel free to correct my understanding of the issues

Kind regards

 

angelsx7and9

 

 

 

Sequence of events as follows:

1). Notified of final pay 22 June; includes holiday pay + notice pay 2) Full details of due pay requested, as advised that deductions would apply to total amount, on 26 June and 5 July. 3) Rec'd info 5 August + P45 dated 31 August 2017. 4). Actual pay not received to date as employee waiting for bank details.

[antone]

0T : no monthly allowance before tax is due, so tax paid on all income.

 

M1: "month one basis applies", though with no allowance I'm not sure there is much difference between '0T-M1' (also seen as '0TX') and just '0T'

 

 

A 0T code operated cumulatively would attempt to collect an "underpayment" of tax back to month 1.

[TaxHero]

I think the reason here is that you are paid after receiving the P45. It is standard for 0T in this case.

 

The other reason is a tax underpayment as stated. However this is unlikely for 2 reasons.

 

1. You should have received a coding norice from HMRC.

2. It would have to be a large underpayment.

[antone]

I think the reason here is that you are paid after receiving the P45. It is standard for 0T in this case.

 

The other reason is a tax underpayment as stated. However this is unlikely for 2 reasons.

 

1. You should have received a coding norice from HMRC.

2. It would have to be a large underpayment.

 

Pretty much, yes. Employers paying after issuing a P45 should use a 0T code - if they didn't, and their former employee has moved on to a new job, then there'd be a problem with duplicated allowances.

[ericsbrother]

not only that but some benefits are taxable but not taxed at source and others arent. You wont be able to sort it out until the end of the tax year