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HMRC internal manual

Employment Income Manual

Employee Car Ownership Schemes (ECOS): money payments received by the employee in person

Introductory remarks, common to this section of the guidance

Unlike car benefit (EIM23000) and car fuel benefit (EIM25500), no single body of legislation deals with ECOS. Instead, the relevant law when considering ECOS is drawn from various parts of the employment income and NICs legislation.

This guidance does not attempt to cover all relevant parts of the legislation in detail. Instead, it seeks to draw the essential aspects together in order to identify where tax and/or NICs can be payable under the normal benefits and expenses rules as they apply to ECOS.

The same principles apply to ECOS vehicles as to any privately-owned vehicles used for business travel.

Unlike the remainder of this manual, EIM31500 to EIM31599 cover both tax and NICs.

Kinds of money payment received by the employee in connection with their own vehicle

These can be of 3 kinds:

  1. payments in respect of mileage expenses of business travel
  2. payments in respect of the use of the vehicle, including private use
  3. payments unconnected with either business mileage expenses or use of the vehicle

Each of these is treated differently. Any single payment may comprise more than one kind, but the kind of payment is fixed when it is made. It is not possible later to treat a payment of one kind as though it had been a payment of another.

1. Payments to the employee in respect of mileage expenses of business travel

An example of such a payment is where an employer pays the employee a flat rate per business mile.

For tax, such payments come within the AMAPs legislation, as described from EIM31200 onwards. They are ‘mileage allowance payments’, or MAPs; see EIM31210 for the statutory definition and for the kind of expense covered. Payments in respect of other vehicle-related business travel expenses are likely to come within Kind 2.

For NICs, they are Relevant Motoring Expenditure (RME, Reg 22A(3)(a) SSCR 2001, SI 2001 No 1004, as amended by SI 2004 No 770) precisely because they are MAPs; see NIM05815 for the statutory definition of RME.

There is a brief summary of AMAPs at EIM31580 and of the NICs mileage scheme at EIM31585.

2. Payments to the employee in respect of the use of the vehicle, including private use

For tax, these can be of 2 kinds:

  1. business expense payments which are not MAPs (e.g. tolls, parking; full details can be found at EIM31215). The normal travel rules apply to these payments, see EIM31800 onwards and NIM05825.
  2. otherwise (including if in connection with private use), they are simply earnings and are within Kind 3 below.

For NICs, all payments to the employee in connection with the use of the vehicle are RME (see NIM05825). Such payments come within the NICs mileage scheme, see brief summary at EIM31585.

3. Payments to the employee unconnected with either business mileage expenses or use of the vehicle

These include payments in respect of ownership of the car rather than its use. They are simply earnings for both tax and NICs. They should be added to other earnings and dealt with through the employer’s normal PAYE scheme in exactly the same way as the employee’s normal salary.

Telling the difference between the above kinds of payment


  • an employer asserts that a payment is a contribution towards or is designed to meet an employee’s costs incurred using their car for business travel, and
  • an employee incurs costs using their car for business travel

do not automatically accept that the payment is for the use of the vehicle. Establish the facts to determine the true nature of the payment. You may find that the payment is simply a round sum allowance or additional pay. The types of facts you should establish include:

  • when is payment made
  • who is entitled to payment
  • what entitles them to payment: is it their grade or their expected business mileage
  • when payment stops
  • what happens when an employee is promoted
  • what happens when an employee is sick
  • conditions that must be satisfied before the payment is made, for example, restrictions placed on the type of car, age of car, minimum business mileage, etc.
  • how the amount paid is calculated and whether it bears any correlation to the actual use of the vehicle.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)  

Other kinds of transaction in favour of the employee

These are listed with links to the relevant guidance at EIM31520.