Company Cars: Taxation
The question
To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential impact of proposed changes to benefit in kind taxation for vehicles provided through Employee Car Ownership Schemes on retired scheme participants; and if she will make an assessment of the potential merits of introducing a (a) grandfathering provision and (b) exemption for existing retirees to avoid retrospective taxation.
Answered by Dan Tomlinson
At Autumn Budget 2024 the Government announced plans to change the legislation around Employee Car Ownership Schemes (ECOS), to prevent them being used by employers to circumvent the employee company car tax (CCT) liability and the employer NICs liability. Private use of a company car is a valuable benefit to an employee, and it is right that CCT is paid on it, ensuring fairness with other taxpayers.
On 21 July 2025, the Government published draft legislation to ensure employees receiving vehicles through these arrangements pay CCT. In response to industry feedback, the changes will now take effect from October 2026 rather than April 2026 as originally announced.
The Government is considering feedback received as part of the technical consultation.
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