What is the future for employee car ownership schemes?

In the pack that accompanied the Budget statement on 30 October 2024 there was the following statement: ‘Ending contrived car ownership schemes: Closing loopholes in employee car ownership (ECO) schemes to prevent them from being used to circumvent company car tax from 6 April 2026.’

There is no further comment made on this and I suspect in due course HMRC will issue a consultation document. However in the meantime the note appears to have created some debate over what is meant by a ‘contrived car ownership scheme’. I will return to this later but first here is some background.

What is an employee car ownership scheme?

This is an arrangement which permits an employer either directly or indirectly to provide a vehicle to an employee without that employee being caught by the taxable benefit rules relating to a company car.

These schemes arose when the taxable benefit rules were...