NFDA Sounds Alarm on ECOS Company Car Tax: What You Should Know

ECOS company car tax proposals meeting with RMI member.

NFDA Voices Concerns Over New Company Car Tax Proposals

The National Franchised Dealers Association (NFDA) has raised alarms regarding the latest proposals targeting the Employee Car Ownership Scheme (ECOS), suggesting these changes may have significant repercussions for the automotive industry. Under draft legislation released by HMRC, vehicles under ECOS will be subjected to benefit-in-kind (BIK) taxation starting October 6, 2026.

NFDA CEO Sue Robinson emphasized the potential downside of this tax, which she claims could make jobs in the industry less attractive, impacting staff recruitment and retention at dealerships. According to NFDA statistics, up to 45% of dealers could feel the squeeze as this change may deter potential talent and lead to a decline in new car registrations, slowing the industry's shift toward electric vehicles (EVs).

Risks of Implementing ECOS Taxation

This taxation overhaul threatens to impede the flow of vehicles into the ‘nearly new’ market, where about 150,000 cars, including many EVs, make their appearance annually. Allowing such a pivotal scheme to be taxed in this way could limit both large and small dealer groups in their efforts to maintain a skilled workforce necessary for a competitive market.

Robinson's appeal to HMRC and the government underscores the critical role ECOS plays as an effective employee benefit, especially during the crucial transition towards sustainability in the automotive sector. The implementation of this proposal may indeed generate short-term revenue for the government, but industry leaders like Robert Forrester of Vertu argue it may ultimately reduce overall tax revenue.

Why This Matters to the Industry

As the automotive landscape evolves, understanding the implications of tax policies like these is essential for businesses in the sector. Prospective buyers and current employees will need to weigh the benefits of car ownership alongside the burdens of taxation. As the NFDA continues to push for reconsideration of this proposal, it's vital for stakeholders in the automotive field to remain closely engaged with these developments.

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NFDA Sounds Alarm on ECOS Company Car Tax: What You Should Know

NFDA Voices Concerns Over New Company Car Tax Proposals

Risks of Implementing ECOS Taxation

Why This Matters to the Industry

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