Ending of ECOS for Cars in April 2026

The UK Government has indicated that it intends to end the Employee Car Ownership Scheme (ECOS) from 6 April 2026. the government believes this scheme is neither legitimate nor fair, despite ECOS users being subject to heavy limitations.

The scheme differs from traditional salary sacrifice schemes in that the car is owned by the employee, not the employer.

Used mostly by car makers and their dealers, ECOS enables an employee to buy a brand-new car at a hugely discounted price, meaning monthly repayment bills are very low, with little or no interest charged.

Equally, because the car is owned by the employee and so not deemed a company car, the employee is not required to pay benefit-in-kind (BIK) tax or national insurance contributions.

It also means that employees get a new car far more often than most, as under the terms of the arrangement, the employee is required to sell the car back, typically after six months or 6,000 miles, when it is then replaced by another.

If your business uses the ECOS scheme, it would be wise to keep abreast of the upcoming changes – we may hear more in the Spring Statement on March 26^th, 2025.