In a recent blog post, I explained why it’s important to understand your payslip. Building on that, I want to highlight a small but significant detail you might see on your payslip: “W1” or “M1” at the end of your tax code.
These stand for Week 1 or Month 1, and while they may look like small details, they have a big impact on how your tax is calculated.
Cumulative tax codes
If you are on a cumulative tax code, you won’t see “W1/M1” on your payslip.
A cumulative tax code means your tax calculation considers:
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All the tax you’ve paid so far in the tax year
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All the earnings you’ve received to date
This approach allows HMRC to “smooth out” your tax across the year. If you underpay or overpay, your code adjusts to correct it in future months.
For example, it’s common for employees who start work partway through a tax year to pay little (or no) tax at first, as any unused tax-free allowance from earlier months is rolled forward and applied to their new earnings.
Non-cumulative tax codes
If you see “W1” or “M1” after your tax code, you are on a non-cumulative tax code.
With a non-cumulative code, each pay period is treated in isolation. Your tax for that week or month is calculated only on your income for that period, without considering what you’ve earned or how much tax you’ve already paid in previous months.
Example: new starters
If a new employee mistakenly ticks Box B on the HMRC Starter Checklist (see my earlier post on this), they may be assigned a W1/M1 code.
Here’s what happens:
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If the employee hasn’t worked earlier in the tax year, they may have unused tax-free allowance.
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Under a cumulative code, that allowance would be carried forward, reducing tax in the first months.
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But under a W1/M1 code, that allowance is ignored, and the employee is taxed only on their earnings that month.
In many cases, HMRC updates the tax code in the following month, and a refund is then issued through payroll.
Why this matters
Tax codes can be complicated, but small differences like this have a big impact on take-home pay. Understanding cumulative vs. non-cumulative codes not only helps employees when they ask “Why have I paid that much tax?”, it also ensures employers remain compliant with HMRC rules.
If you have any questions or queries about your payslip, do not hesitate to get in touch with our Payroll team.
Disclaimer
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.