Broadly speaking, an Employee Car Ownership Scheme (ECOS) is a
set of arrangements whereby employees acquire cars from a specified
(often a single) source and within a specified financing framework.
The schemes are also known by similar names, such as
“Employee Car Purchase Schemes” or “Employee Car
Ownership Plans”. They do not include mere “cashing
out” arrangements where the employer stops providing a
company car, increases remuneration and simply leaves the employee
to get their own car. Nor do they include what are often referred
to as “affinity schemes”, where the employer only acts
as introducer and plays no further part.
A scheme may be designed and administered by
Most of the large firms of accountants are involved in marketing these schemes. Typically they are designed to give employees most of the benefits of a company car
Unlike car benefit (EIM23000) and car fuel benefit (EIM23700),
no single body of legislation deals with ECOS. Instead, the
relevant law when considering ECOS is drawn from various parts of
the employment income and NICs legislation.
You will find guidance about ECOS in EIM31510 to EIM 31595. The guidance does not attempt to cover all relevant parts of the legislation in detail. Instead, it seeks to draw the essential aspects together in order to identify where tax and/or NICs can be payable under the normal benefits and expenses rules as they apply to ECOS.
The same principles apply to ECOS vehicles as to any privately-owned vehicles used for business travel.