Why Is My Tax Code D0 M1?
If you are wondering why you have been assigned the D0 M1 tax code, you will find the answer to your question in the following blog post. In addition to explaining the reasons why one may be assigned the D0 M1 tax code, we will also discuss the steps you can take if you’ve been assigned this tax code in error.
Why Is My Tax Code D0 M1?
There are a number of individual and collective reasons why you have been assigned the D0 M1 tax code by the HMRC. These include the following:
- you are working at two jobs and the D0 M1 tax code is assigned to your second job; or
- you are receiving income through a job and a pension
- your entire income is being taxed without deduction of Personal Allowance
- your gross earnings are between £37,701 and £150,000.
- you are being taxed at the higher rate of 40%
If you have two sources of income; either through two jobs or one job and a pension, you can be assigned the D0 tax code for your second job. This will only happen if your income from the second job is subject to a higher tax rate of 40%.
The D0 tax code also indicates that the entire amount of your income must be taxed at 40% as your tax-free Personal Allowance of £12,750 is already consumed when applied to your primary source of income.
The addition of the M1 extension at the end indicates that your pay for the month in question is being taxed at this rate and the code does not take into account your earnings from the entire year. This means that this is a non-cumulative tax code which is likely to change at the end of the tax term.
The reasons why an M1 tax code extension is added include the following:
- you have changed jobs during the tax year there is a change in your income
- you were unemployed and have recently joined the workforce
- you have shifted from self-employed status to the PAYE system as a paid employee
Since most tax codes are cumulative in nature and take your earnings throughout the year into account when they are assigned by HMRC, having an M1 extension added to your D0 tax code indicates that you will be assigned a permanent tax code extension at the end of the tax term.
However, if any of these conditions don’t apply to you and you think that you’ve been assigned the D0 M1 tax code in error, you need to inform your employer and the HMRC so that you don’t overpay your taxes and your tax code can be corrected.
What Happens If I Overpay Taxes Because Of The D0 M1 Tax Code?
In case you overpay your taxes due to being assigned the D0 M1 tax code, you can claim a tax refund from the HMRC. You will need to file a formal application and provide the necessary evidence to support your claim. If your application is approved, you will receive a confirmation letter from HMRC and expect a tax refund after the end of the tax year.
If you have claims for overpaid taxes in the recent past, these can be applied for up to four years. This means that an overpaid tax in 2022 can be claimed until 2026.
In most cases, a taxpayer overpays their tax due to the following reasons,
- being put on an emergency tax code due to starting a new job,
- having two jobs simultaneously, or
- switching from a full-time to a part-time job
What Should I Do If I’ve Been Wrongly Assigned The D0 M1 Tax Code?
If you have reason to believe that you’ve been assigned the D0 M1 tax code in error, you should contact the HMRC and have the error corrected.
You can either call them on their helpline at 0300 200 3300 or use the HMRC income tax checker tool online by accessing your Personal Tax Account. You will not only have to provide reasons why you think you’ve been assigned an incorrect tax code but will also need to provide details related to your employment that can support your claim.
If you are unable to manage dealings with HMRC regarding the required changes to your tax code, you can ask friends or family to help you. They will need to be registered online as a trusted helper.
The above discussion clearly explains the reasons why a D0 M1 tax code is assigned. This usually happens when someone has two jobs and is assigned a higher tax rate of 40% on their second job due to the scale of their income. The M1 extension indicates that this is a temporary tax code that applies to the month in question and will most likely be changed at the end of the tax term.