Why can Employee Car Ownership (ECO) save money compared to company cars?
Why can Employee Car Ownership (ECO) save money compared to company cars? Employee Car Ownership (ECO) is a viable alternative to simply providing an employee with a company car. The scheme can be altered to provide the exact level of benefit that you want to give to your staff, offering great versatility and flexibility for budgeting purposes.
It will also typically include a full maintenance package which ensures that vehicles are serviced, maintained and fit for purpose, minimising risk and potential future costs.
The cost to the driver is funded partly by way of the savings they make by no longer having to pay company car tax, and also by the budget paid to them by their company. In turn, the budget paid is partly funded by Tax & NI free AMAPs.
The exact financial nature of the benefits of an ECO vary depending on how it is structured in the first instance. Some of the factors which can influence the overall financial benefits include:
- Private fuel provision.
- Business mileage profile.
- Total mileage profile.
- Employee marginal rate of tax profile.
- The level of car benefit already being provided.
Once an ECO is in place, the company will not need to pay NIC on the scheme as the employee will not be taxed as having a company carThe tax that the employee would have been liable to pay if they had a company car will be used to pay for the overall cost of the car, creating a genuine saving.
For more information on why can ECO save money compared to company cars or to understand how they could be used in conjunction with our other vehicle fleet options, give our team of experienced Account Managers a call on 0800 091 4252.