Employee car ownership (ECO) schemes are tax efficient schemes in which an employee owns their vehicle from day one, significantly reducing company car tax and National Insurance contributions as a result.
Are work car schemes worth it?
Company cars arranged under a salary sacrifice scheme do however attract the Benefit-in-Kind (BIK) tax, but even so, by making a careful vehicle choice it still results in an overall saving. While you still have to pay NICs on the car, this is a lot less than the employer NICs that would have been paid on the salary.
How does salary sacrifice car scheme work?
In a salary sacrifice car scheme, an employee forgoes a portion of their gross salary in exchange for savings on tax and national insurance (NI). The employee will save tax and NI on the sum that has been sacrificed, and the value of the car benefit is subject only to benefit-in-kind (BIK) tax.
What is CBS car scheme?
Car Benefit Solutions are experts in the provision of Employee Car Ownership Schemes and other tailored car schemes including salary sacrifice. Sponsored by motor manufacturers and facilitated by CBS, our schemes are designed to benefit both employer and employee.
Are there any car ownership schemes for employees?
ECO schemes have been around for many years but became somewhat overshadowed by salary sacrifice in recent times. However, changes to the way that BiK is calculated for salary sacrifice cars means that employee car ownership schemes are having a revival.
Is there a way to own a car as an employee?
However, there is another way: employee car ownership schemes (ECOS). We take a look a closer look at ECOS including what they are exactly and what benefits they can deliver.
What is an employee car purchase scheme eim31501?
Unlike the remainder of this manual, EIM31500 to EIM31599 cover both tax and NICs. Broadly, an employee car ownership scheme (also called an employee car purchase scheme and by various similar names) is a set of arrangements whereby employees acquire cars within a specified financing framework.
What does employer gain from employee car scheme?
The employer gains by keeping control of the fleet policy, and the vehicles being used for business journeys, both of which are lost if cash allowances are offered. The provision of a high-perceived-value employee car scheme also assists in the recruitment and retention of sought-after members of staff.
