Meaning of OTM1

[chattykathy]

My niece's tax code in her new job is OTM1, does anyone have an idea of what this means?
TIA

[Halifaxmum]

Hi Kathy - it does not mean zero tax, as a lot of people think! lol

It means you have no tax-free allowances at all, so all income is subject to tax, starting at the lowest rate.

[Halifaxmum]

The M1 signifies an emergency tax code - all this means is that any tax she had already paid in this tax year (Apr 11-Apr 12) is not included in the calculation of current tax due.

Has she had a gap in employment, or not given a P45 on to her new employer?

[factor-fiction]

I think it's like basic rate/ month 1 code as Halifax mum describes.
Does she have a second job? Maybe it's temporary until they get her P45/p46 and can set the correct code

[chattykathy]

It's her first proper paid job, she was on an apprenticeship scheme before so didn't pay tax. I take it she will be able to claim a tax rebate after April as she won't have earned anything like her allowance.
Thanks

[dzug2]

She should be able to get a proper code (and thus a refund) before April

[chattykathy]

Should her employer sort that out or does she need to contact HMRC?

[dzug2]

Her employer should have supplied her with a form - sorry can't remember the number

[buildersmate]

P46 - but you could download a copy of the form from the HMRC website here.
http://www.hmrc.gov.uk/forms/p46.pdf

[chattykathy]

Thank you all so much. I'll pass on the advice :-)

[Skyline D]

Minor correction. M1 does not signify an emergency tax code. It does signify, as Halifaxmum correctly said, that tax is calculated monthly with no relevance to what has been paid to date in the tax year. Each month is calculated wholly independently. However, there's nothing "emergency" about that and many people have such a code on an ongoing basis.

[Halifaxmum]

sorry skyline, but M1 does signify an emergency tax code - it's not as scary as everyone thinks tho... and it will always be rectified at the end of the tax year (5 April) - an emergency code will always lose the M1/W1 when the tax year changes, unless the employer is different

[Skyline D]

Sorry halifaxmum but it absolutely does no such thing. The M1 part of the code has no relationship at all to whether it's an emergency tax code.

Many people have an M1 suffix without it being an emergency code. An emergency code usually has an M1 suffix but not all M1 suffixes are emergency codes and some emergency tax codes don't have an M1 suffix.

If you choose not to believe me then the links below confirm that:

http://www.hmrc.gov.u...e/intro/tax-codes.htm

http://www.hmrc.gov.u...ew-employee-nop45.htm

In particular note that the part on the second link about what emergency code to use for employees who don't have a P45 highlights that of four possible emergency codes, two have an M1 suffix and two don't.