Overview

• HMRC published draft legislation in July to reclassify Employee Car Ownership Scheme vehicles as taxable company cars under benefit-in-kind rules
• The effective date for the new ECOS tax treatment has been delayed to October 6, 2026, leaving employers just over a year to adapt
• HMRC and the Treasury estimate the change will affect 76,000 employees across 1,900 companies and raise £275 million in its first year
• Industry voices including Vertu Motors and motor-accountancy firms RMS and Cooper Parry warn the reclassification could shrink new and nearly-new vehicle stock and disrupt staff reward packages
• Accountancy advisers are urging employers to review or wind down ECOS arrangements now and consider salary-sacrifice alternatives ahead of the implementation deadline