An Employee Car Ownership Scheme (ECOS) is a set of arrangements whereby employees acquire cars from a specified, often single source and within a specified financing framework. The use of an ECOS can be seen as a halfway measure between providing a company car and leaving an employee to make all their car arrangements privately.
An ECOS gives employees similar benefits to having a company car, for example a new car on a regular basis, and/or central organisation of insurance and servicing but is structured in such a way that the normal car and fuel benefit provisions do not apply.
As the normal car and fuel benefit charges do not apply to an ECOS, HMRC is clear that each transaction has to be considered individually for both tax and NICs purposes to identify whether tax or NICs apply. One of the most important conditions that must be met for an ECOS to be in place, is that the ownership of the car in an ECOS is transferred to the employee at the outset otherwise car benefit will be due.
An ECOS may be designed and administered by the employer, by a company within the same group as the employer, or by a third party that specialises in provision of alternative packages to the company car.