Is the employee's tax code operated on a cumulative basis?

An employer uses the employee's tax code in conjunction with your payroll software or tax tables to calculate the amount of tax they deduct from an employee's wages. They can use codes on a cumulative or a non-cumulative basis.

Using a tax code on a cumulative basis means that every payday you need to work out the tax due on your employee's earnings for the year to date then deduct from it the tax they have already paid on their earnings that year. The remaining figure is the tax due for the pay period, the week or month for example.

A non-cumulative tax code would be signified by an 'x' or 'wk1/mth1' following the code. In these cases the tax should be worked out purely on the taxable pay for each individual pay period. Each payday is treated as if it is the first week or month of the tax year. Previous pay and tax details are ignored.