Cumulative tax codes
When a tax code is cumulative, the monthly tax calculation will take into account taxable pay and tax paid year to date in order to determine the tax due in that period. That means that any overpayments and underpayments from previous pay periods can be corrected in real-time via the payroll.
Non-cumulative tax codes
A non-cumulative tax code is also known as a week 1, month 1 tax code or an ‘emergency’ tax code. It only uses your taxable earnings in the current pay period, ignoring any earnings, or tax paid earlier in the tax year. Effectively, a non-cumulative tax code will always treat earnings as if you're being paid in the first pay period of the tax year, e.g, month 1.
Identifying non-cumulative tax codes
Non-cumulative tax codes are identified by the M1 or X that follows the actual tax code. For example:
1257L W1/M1
1257L M1
1257L X
Differences between cumulative and non-cumulative tax codes
The below table shows the impact of a cumulative and non-cumulative tax calculation when paid monthly:
Scenario | Cumulative | Non-cumulative |
Personal allowance | You'll accrue one twelfth of your annual personal allowance each month. | You'll receive one twelfth of your annual personal allowance for the current month. |
Tax underpayment | Your tax is automatically recalculated in your next payslip to repay the underpaid tax. | You won't repay the tax you owe through your payslip. You'll need to repay the tax directly to HMRC, or ask them to adjust your tax code. |
Tax overpayment | Your tax is automatically recalculated in your next payslip to refund the overpaid tax. | You won't receive a refund for your overpayment. You'll need to ask HMRC to repay the tax to you directly, or ask them to adjust your tax code. |
P45 | Your P45 will include your taxable earnings and tax paid in the current tax year. | Your P45 won't include your taxable earnings and tax paid in the current tax year. |
Tax thresholds | If your pay fluctuates, your tax will steadily increase or decrease. | If your pay fluctuates, you'll pay more tax in some months, and less in others. |
Reasons for a non-cumulative tax code
Some reasons you might be a non-cumulative tax code are:
You've selected Box B on the Starter Checklist, indicating that you've had other earnings within the tax year.
Your non-cumulative tax code from your previous employment was included on your P45
HMRC have issued a non-cumulative tax code while they investigate an under or overpayment.
If you're unsure why you're on a non-cumulative tax code, you can check this in your personal tax account. Otherwise you can contact HMRC directly. Your employer can't change your tax code after you've started, unless HMRC have instructed them to do so.