"The move, announced by Chancellor Rachel Reeves last autumn, would see Ecos vehicles taxed as benefits in kind - ending their exemption and aligning them with salary sacrifice schemes already subject to company car tax. Under the current system, Ecos allow employees to buy new cars from their employer via a credit agreement, saving employers and workers millions in National Insurance contributions. The schemes are especially popular among car company staff, who can drive new models at discounted prices for around six months before the vehicles are sold on as "nearly new" stock."
"According to SMMT analysis, around 100,000 cars are currently provided to workers through Ecos each year - roughly 5 per cent of the UK's new car market. The group predicts that figure would collapse to just 20,000 if the tax goes ahead, leading to a £1 billion revenue loss for carmakers, 5,000 jobs at risk, and a £500 million fall in VAT and vehicle excise duty receipts."
The Treasury plans to impose company car tax on employee car ownership schemes (Ecos) from October 2026, ending their current exemption and aligning them with salary sacrifice rules. Ecos enable employees to acquire new cars through employer credit agreements, saving employers and workers substantial National Insurance contributions and supplying nearly-new stock to retailers. Industry analysis estimates about 100,000 cars per year are provided through Ecos (around 5% of new-car sales) and predicts a collapse to 20,000 vehicles if taxed, causing approximately £1 billion in lost carmaker revenues, 5,000 jobs at risk, and a £500 million fall in VAT and vehicle excise duty receipts. The Treasury projects initial receipts of £275 million, declining to £175 million by 2030.
Read at Business Matters
Unable to calculate read time
Collection
[
|
...
]