This measure is about bringing Employee Car Ownership Schemes (ECOS) within the scope of the benefit in kind rules as company cars from 6th April 2030, with transitional arrangements.
What is an ECOS scheme
An ECOS is something more organised than the employer simply ceasing to provide a company car and (normally) increasing taxable pay to compensate. In such cases, the employer leaves the employee to get a car from any reputable source without becoming involved in the purchasing or financing arrangements in any way.
An ECOS may be designed and administered by the employer, by a company within the same group as the employer, or by a third party that specialises in provision of alternative packages to the company car.
In essence an ECOS is designed to give employees similar benefits to a company car (for example a new car on a regular basis, central organisation of insurance and servicing) in a way that means the car benefit provisions do not apply.
What’s the change
The change will eventually require employers to account for ECOS cars through payroll as they would for normal company cars provided to employees.
The original measure was initially announced at Budget 2024 with amendments announced at budget 2025 to change the benefit in kind rules so that vehicles provided through ECOS will be deemed as taxable benefits from 6th April 2030.
Transitional arrangements will apply for employees still in schemes established prior to that date. They will be able to use the previous treatment, until either the arrangement changes, is renewed, or until April 2032, whichever happens first.
Who is this impacting?
It is estimated to impact an estimated 80,000 individuals who currently receive cars through ECOS as they will become liable for the Income Tax associated with the benefit.
The announced delay means individuals will not be impacted until 6 April 2030 This means they will have time to seek alternative arrangements with their employers.
When does it start?
Individuals still receiving a vehicle through ECOS after 6th April 2030, subject to the transitional arrangements, may need to pay the appropriate benefit in kind charge.
Impacted employees may choose to retain the current vehicle through a normal car scheme, choose a lower emitting (lower tax) vehicle or choose to go without a company car altogether. This measure is not expected to impact on family formation, stability or breakdown
The origins of the change
This measure combines a measures from:
- Autumn Budget 2024 — Ending contrived car ownership schemes: closing loopholes in Employee Car Ownership Schemes to prevent them from being used to circumvent Company Car Tax from April 2026
- Budget 2025 — Support for British automotive industry: Delay bringing Employee Car Ownership Schemes within the benefit in kind rules from 6 April 2026 to 6 April 2030, with a two year transition period
PAYadvice.UK 3/12/2025