P11D processing: ECS / NPS inhibition signal: setting the ECS / NPS inhibition signal
Why this signal may be set annually
Although an employer has a legal requirement to submit P11Ds for every employee to whom they have paid / provided expenses and benefits, in certain circumstances we need to prevent these details from reaching NPS. Examples of these are
- Payrolling - the employer payrolls all the expenses and benefits paid to all of their employees. Allowing the P11D details to flow to NPS will result in the employees paying tax twice on some, or all, of them, for example, once through their salary and again through their tax code
- Church of England clergy
When this signal should be set
Where it is appropriate this signal must be set annually on the relevant schemes. There is guidance for employers asking them to contact the Employer Helpline if they operate payrolling and they do this for all of the employees to whom they pay expenses and benefits.
Important note about payrolling: Setting the Inhibition signal must only happen where the employer payrolls all of the benefits paid to all of their employees. There is guidance for employers about letting us know that this is the case. In the majority of payrolling cases the employer only payrolls some of those benefits, for example, medical benefit, but does not for example payroll company cars. Setting the signal is not required in these circumstances. Guidance on what the employer should do in the various payrolling scenarios is provided on the Employer pages of the HMRC website.
How to set the ECS / NPS inhibition signal
You will need the ECS Role ‘P11D Manager’ to set the ECS / NPS inhibition signal
- Select the P11D button on the Select Employer screen
- Select Related
- Select the set inhibition button
- Select the [OK] button - you will be prompted to confirm that the signal is to be set
- A note should be on ECS made giving the reason why the Inhibition Signal has been set, see PAYE57336
- The same note should also be made on EBS