logo
Uproar over end of bargain deals for car industry staff

Uproar over end of bargain deals for car industry staff

Yahoo19-03-2025

ECOS requires owners to sell a car back after six months or 6000 miles
The government's plan to end what it has called 'contrived car ownership schemes' has rattled the UK's automotive industry, which forecasts devastating consequences for itself and its workers if this becomes law.
The Employee Car Ownership Scheme (ECOS), which the government intends to end from 6 April 2026, differs from traditional salary sacrifice schemes in that the car is owned by the employee, not the employer.
Operated mainly by car makers and their dealers, ECOS enables an employee to buy a brand new car at a hugely discounted price. Monthly repayment bills are very low, with little or no interest charged.
Under the terms of the arrangement, the employee is required to sell the car back, typically after six months or 6000 miles. It's then replaced by another.
Because the car is owned by the employee and so not deemed a company asset, the employee is not required to pay benefit-in-kind (BIK) tax or national insurance contributions.
As such, the government believes this arrangement is neither legitimate nor fair, despite ECOS users being subject to heavy limitations.
In her Autumn Budget, chancellor Rachel Reeves outlined measures to 'level the playing field' because 'this arrangement means those benefiting don't pay company car tax which other employees pay'.
Speaking to Autocar, manufacturers said they had been given few details on the proposed changes and were still considering the government's plans.
A spokesperson for Stellantis said the group was 'speaking directly to the UK government on the impacts and to understand further details and timings'.
The Society of Motor Manufacturers and Traders (SMMT) said the chancellor's announcement had come as a 'complete surprise' after decades of the industry operating ECOS unchallenged.
The SMMT questioned Treasury estimates that taxing ECOS cars as employee benefits would raise £275 million in the 2026-27 tax year and a further £590m over the following three years, because it believes this income would come at the expense of VAT and VED (road tax) on new cars no longer being sold.
Urging the government to reconsider its plans, SMMT CEO Mike Hawes said: 'These schemes are an integral part of the remuneration packages that attract people into the industry and allow employees affordable access to the products they make. They are an important part of the new car market and provide a key source of nearly new vehicles to the used market.
'Removing these schemes would challenge manufacturers' business models, restrict their ability to retain and recruit staff and constrain efforts to decarbonise road transport.
'These [ECOS cars] are new models, reflecting the latest technologies and, as such, are increasingly electric, so to cut off this new and used vehicle supply at exactly the time the industry must drive up EV adoption would be a perverse step.
'Not only would this undermine industry and government net-zero ambitions, it would also be counterproductive to economic growth, actually decreasing government revenues from lost VAT and VED, and hurt working people and their families financially.
'We would urge government to think again about this proposal and support the industry and its workforce at this critical time.'
The SMMT claims that each year, ECOS generates around 150,000 cars for the 'nearly new' market and are a valuable mix of popular vehicles and those, such as EVs, that customers would be wary of buying new.
However, used car valuation experts have disputed the magnitude of the impact that ending ECOS would have on used market supply.
A spokesperson for Cap HPI said: 'It won't have an impact on nearly new volumes. The numbers involved are tiny compared to daily rental. The [ECOS] vehicles are often on very strict mileage and there are strict rules on how long they can be kept.'
Meanwhile, Ed Steele, MD of leading automotive recruitment specialist Steele-Dixon, has predicted that employee recruitment won't be so badly affected by the banning of ECOS.
'Banning the schemes will hamper recruitment, but then if everyone is suffering, I suspect the impact will not be so great,' he said. 'At the moment, the prospect is a worry but not yet a problem, and I'm sure the accountants and lawyers will come up with a solution.
'If they don't, a ban might be a good thing, since 99% of the people I deal with haven't a clue what it costs to pay for your own car. They should know what it's like for those people who do.'
The prospect of a new car every six months on terms significantly better than anyone outside the car industry can enjoy sounds great, doesn't it? Not according to one manufacturer employee in receipt of the benefit.
The employee, who asked not to be identified, has a 1.0-litre hatchback on his firm's ECOS that costs him just £85 per month. He pays no benefit-in-kind tax or national insurance contributions on it and it's replaced every six months.
However, he says there are strict limits as to which model he can order and with which options, and even then, his order can be overruled by the factory and a different specification from the one he requested supplied. He must pay an excess mileage charge if he does more than 6000 miles in the car and any damage it suffers must be repaired by a manufacturer-approved garage whose prices, he says, tend to be higher than elsewhere.
If he puts the car through a car wash, any swirl marks must be polished out at a cost of £80, and a chipped windscreen must be replaced, not repaired.
'The scheme is great in the sense that the car is cheap, and unless I damage the car, I don't have to budget for new tyres or servicing,' the employee said.
'The downsides are that it's quite inflexible and the higher refurbishment and repair costs put many employees with families off the scheme, because of the damage their kids might do to the car's interior.
]]>

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Child Benefit changes on cards after Martin Lewis' WhatsApp from Rachel Reeves
Child Benefit changes on cards after Martin Lewis' WhatsApp from Rachel Reeves

Yahoo

time43 minutes ago

  • Yahoo

Child Benefit changes on cards after Martin Lewis' WhatsApp from Rachel Reeves

Child Benefit changes could be on the cards as Martin Lewis mentioned in a Newsnight appearance, in which he shared that Rachel Reeves had sent hm a WhatsApp message following the winter fuel payment u-turn. On Newsnight, the Money Saving Expert founder said: "I've been complaining about the Child Benefit Higher Income tax clawback for years, because what that does is that it says if the highest earner in the household earns over £80,000, you don't get Child Benefit. "So then you've got two neighbours who earn just under £60,000, so that's £120,000 for that family. They get Child Benefit. Their next door neighbour, one earns £80,000, one earns nothing, they don't get it. "I have been told for years that we can't split a household payment into a personal tax payment, which is exactly what the government has just done. "So when I got a WhatsApp today from Rachel Reeves telling me, 'sorry I couldn't explain to you in person', because I've been lobbying hard that we need to change on this (winter fuel payment changes), my first reply back is, 'this is wonderful news, and I am relieved, and this is a massive improvement, and I think it will take a lot of pressure off a lot of vulnerable people'. But I did also say, 'by the way, can we now do it for Child Benefit'?." The high-income child benefit charge applies if you or your partner earn more than £60,000. Under current rules, you need to file a self-assessment tax return to pay the charge, but it was mentioned in the Spring Statement that this will soon be available to pay directly through PAYE. Once registered with HMRC, parents should be able to choose to have their HICBC collected through their monthly pay packet, meaning they'll no longer need to file a return for that purpose. "I got a Whatsapp today from Rachel Reeves..." Martin Lewis tells @vicderbyshire he has been texting the Chancellor on how her Winter Fuel U-turn could pave the way for a new approach to Child Benefit payments. #Newsnight — BBC Newsnight (@BBCNewsnight) June 9, 2025 From April 7 2025, parents receive £26.05 a week (£1,355 a year) for their eldest or only child and £17.25 a week (£897 a year) for each additional child. These figures are a 1.7% increase on the £1,331 a year for the eldest child and £881 a year for each additional child paid in 2024-25 For now, if your income is over the threshold, you can choose to either get Child Benefit payments and pay any tax charge at the end of each tax year, or opt out of getting payments and not pay the tax charge. You should still fill in the Child Benefit claim form. You need to state on the form that you do not want to get payments. You need to fill in the claim form if you want to: get National Insurance credits, which count towards your State Pension get your child a National Insurance number without them having to apply for one - they'll usually get the number before they turn 16 years old Recommended reading: Some parents are owed thousands by HMRC - check if you are eligible Need a last-minute Father's Day gift? We've got it covered Family holidays for less than £250 across France, Spain and Italy No, and this is the cause of a great deal of confusion, as Martin Lewis has explained on his website Money Saving Expert. "Child Benefit is a universal payment made for every child you have," he says. "It should accurately be called the 'two-child limit for Universal Credit or Tax Credits'. "This one applies to the benefits that people who have low incomes, whether they're working or not working, get. That's what this is about. "And in simple terms, it means if you have more than two children, then you won't get any additional benefit for the costs that they are incurring you (on Universal Credit and Tax Credits)."

Voices: Wes Streeting has won the spending review – but will he blow his winnings?
Voices: Wes Streeting has won the spending review – but will he blow his winnings?

Yahoo

time43 minutes ago

  • Yahoo

Voices: Wes Streeting has won the spending review – but will he blow his winnings?

If Rachel Reeves did the spending review like a game show, she could invite her cabinet colleagues to 'come on down' the catwalk between the two red lines in the Commons, to music and strobe lights, to take their seats on the front bench. She could announce the winners of the competition for public funding over the next three years in reverse order, with David Lammy, the foreign secretary – who has lost a big chunk of his foreign aid budget – going first, followed by Heidi Alexander, the transport secretary, and Steve Reed, environment. The last to be summoned, as the ABBA soundtrack switches from 'Money, Money, Money' to 'The Winner Takes It All', would be Wes Streeting, the health secretary, who has been allocated spending increases of 2.8 per cent a year more than inflation over the three years from next year to 2029. Arms in the air, in a sequinned jacket, as glitter falls from the ceiling, Streeting would take his place next to John Healey, the defence secretary, at the top of the line of winners and losers. Sadly, the announcement of spending plans for the rest of this parliament will be less showbiz. Reeves will try to generate a bit of excitement, and maybe even some waving of order papers, by spinning the big and welcome increase in capital investment – although she has already cannibalised some of her good news stories with her transport infrastructure announcement last week and the go-ahead for Sizewell C nuclear power station today. The problem with the capital projects, though, is that they will not start until 2027 at the earliest, so they won't have delivered anything except feelgood press releases before the next election. Whereas the big increase in day-to-day spending on the NHS is the kind of vote-winning largesse for which Labour MPs are desperate. In the absence of glitter and balloons, the waving of order papers will be compulsory on the government benches at this point. But wait: who is this, coming to spoil the party? It is the Institute for Fiscal Studies (IFS), performing its constitutional role of puncturing inflated government claims. Labour, having used the IFS to attack the Conservatives at fiscal events over the previous 14 years, will find that the tables have turned (even if the Treasury insists that this is not a 'fiscal event' – it is merely allocating a spending total set at the Budget). Max Warner and Ben Zaranko of the IFS have written a paper for the Oxford Review of Economic Policy entitled 'Future challenges for health and social care provision in the UK'. It contains some startling facts, such as that, by the middle of the next decade, the NHS will employ 10 per cent of the entire workforce of England. It also contains a striking table showing the increase in the number of doctors and nurses employed in the NHS since 2019, and the increase in treatments. There are 18 per cent more consultants, 32 per cent more resident doctors (who were called junior doctors in the old days, a year ago) and 23 per cent more nurses and health visitors, which are huge increases in just five years. But the outputs from such dramatic increases have been disappointing. Hospital admissions have risen by just 9 per cent (except A&E admissions, up 2 per cent), and outpatient appointments have increased by just 12 per cent. The IFS authors comment: 'The large fall in NHS hospital productivity since the start of the pandemic complicates the picture.' They say there are two scenarios for the future: 'The optimistic view is that there is substantial scope for 'catch-up' improvements in productivity: merely returning to pre-pandemic levels would represent a considerable improvement. The more pessimistic view is that the pandemic has permanently lowered NHS productivity, because of the ongoing impacts of Covid-19 on patient health and complexity and changes to working practices or expectations.' They tentatively conclude that there are recent signs that NHS productivity is recovering, but the loss of capacity is still alarming. Despite the huge amounts of extra spending devoted to the NHS since the election, and promised for the next three years, no one in the think tanks that specialise in the health service thinks that Labour's targets will be hit by the next election. Will Streeting, the lucky winner of the spending review showdown, be able to convince the voters that he has spent their money well?

Key questions answered on Sizewell C after Reeves confirms nuclear investment
Key questions answered on Sizewell C after Reeves confirms nuclear investment

Yahoo

timean hour ago

  • Yahoo

Key questions answered on Sizewell C after Reeves confirms nuclear investment

Chancellor Rachel Reeves has signed off on a £16 billion investment in nuclear power, including funding to build the Sizewell C nuclear power station. It comes ahead of the spending review on Wednesday, where Ms Reeves will outline departmental budgets for the next three years. Here we answer key questions about Sizewell C and the Government's wider nuclear power plans. – What is the Sizewell C nuclear plant? Sizewell C was first proposed 15 years ago on a site by the hamlet Sizewell, which sits on the Suffolk coast between Aldeburgh and Southwold. The area is already home to two separate power stations, the decommissioned Sizewell A nuclear plant and pressurised water reactor Sizewell B. Nuclear power plants use a process called nuclear fission, where atoms split, releasing heat which is then used to generate electricity. – How much funding has the Government announced? The Chancellor said £14.2 billion will be invested to build the Sizewell C plant, marking the end of a long journey to secure funding for the project since it was first earmarked in 2010. At the peak of construction, Sizewell C is expected to provide 10,000 jobs. The company behind the project has already signed £330 million worth of contracts with local businesses. Elsewhere, the Government confirmed one of Europe's first small modular reactor (SMR) programmes, backed by £2.5 billion in taxpayers' money over five years. Ministers announced Rolls-Royce as the winners of a long-running competition on Tuesday for the bid to build the SMR programme. – How could Sizewell C contribute to the UK's future energy system? Sizewell C will power the equivalent of six million homes and is planned to be operation in the 2030s, the Government said. It is also understood that the plant will generate electricity for 60 years. The Treasury said that, combined with the ambition to build SMRs, it would deliver more new nuclear energy to the grid than over the previous half century by the 2030s. It comes as nuclear plants are seen as increasingly important electricity sources as the Government tries to decarbonise Britain's grid by 2030, replacing fossil fuels with green power. The last time Britain completed one was in 1987, which was the Sizewell B plant. Hinkley Point C, in Somerset, is under construction and is expected to produce enough power for about six million homes when it opens, but that may not be until 2031. Sizewell C is part of the Government's wider ambitions to support clean power, such as wind and solar, and decarbonise the country's power grid to tackle the climate crisis and ensure future energy security. – What are small modular reactors? SMRs are a nuclear fission reactor that are a fraction of the size of a traditional nuclear plant. This means they can be built on smaller sites across the country, closer to where the electricity is needed. Still an emerging technology, only China and Russia have successfully built operational SMRs. The Government says the newly-announced UK project could support up to 3,000 new skilled jobs and power the equivalent of around three million homes, with a first site expected to be allocated later this year by state-owned Great British Energy – Nuclear. The hope is eventually attract private investment, especially from tech companies, which might build SMRs to power data centres.– Who has welcomed the Government funding? Trade unions welcomed the move, which the Treasury said would go towards creating 10,000 jobs, including 1,500 apprenticeships. The GMB union said giving Sizewell C the go-ahead was 'momentous'. Regional secretary Warren Kenny said: 'Nuclear power is essential for clean, affordable, and reliable energy – without new nuclear, there can be no net zero. 'Sizewell C will provide thousands of good, skilled, unionised jobs and we look forward to working closely with the Government and Sizewell C to help secure a greener future for this country's energy sector.' Mike Clancy, general secretary of Prospect, said: 'Delivering this funding for Sizewell C is a vital step forward, this project is critical to securing the future of the nuclear industry in the UK. 'New nuclear is essential to achieving net zero, providing a baseload of clean and secure energy, as well as supporting good, unionised jobs. 'Further investment in SMRs and fusion research shows we are finally serious about developing a 21st-century nuclear industry. 'All funding must be backed up by a whole-industry plan to ensure we have the workforce and skills we need for these plans to succeed.' – Who has criticised the plans? Various campaigners oppose the plant and have criticised the decision to commit the funding, saying it is still not clear what the total cost will be. Alison Downes of Stop Sizewell C said ministers had not 'come clean' about the full cost of the project, which the group has previously estimated could be some £40 billion. 'There still appears to be no final investment decision for Sizewell C, but £14.2 billion in taxpayers' funding, a decision we condemn and firmly believe the Government will come to regret. 'Where is the benefit for voters in ploughing more money into Sizewell C that could be spent on other priorities, and when the project will add to consumer bills and is guaranteed to be late and overspent just like Hinkley C? 'Ministers have still not come clean about Sizewell C's cost and, given negotiations with private investors are incomplete, they have signed away all leverage and will be forced to offer generous deals that undermine value for money. Starmer and Reeves have just signed up to HS2 mark 2.' Environmental campaigners have also warned of the impact the plant could have on local wildlife, given Sizewell is surrounded by protected areas. The whole coast is an area of outstanding natural beauty (AONB), the shingle beach is a site of special scientific interest (SSSI) while the nearby Sizewell Marshes and Leiston Sandlings are special protected areas (SPAs) for birds. Many argue that ministers should focus on investing in renewable energy, such as wind farms, instead.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store