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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Employee Car Ownership Schemes (ECOS): loans

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.


The guidance about payments received by the employee in person (EIM31525) and payments of the employee’s personal/pecuniary liability (EIM31530) relies on the payment being non-repayable. If it is in the form of a loan, the position is different as described on this page.

Genuine loans

A genuine loan is not earnings for either for tax or NICs but is instead subject to the beneficial loans legislation. Guidance on this for tax can be found starting at EIM26100 and for NICs at NIM13150.

Other payments described as loans

There is one exception to the rule above. We do not accept that a payment in respect of business fuel expenses already incurred can be described as a loan in any meaningful sense.

Such a payment is in principle immediately taxable as an expenses payment under section 72 ITEPA. Because it is a Mileage Allowance Payment (MAP, EIM31210), actual chargeability is subject to exemption as AMAPs, EIM31230. As a MAP, it is also Relevant Motoring Expenditure (RME, Reg 22A(3)(b) SSCR 2001, SI 2001 No 1004, as amended by SI 2004 No 770; see NIM05815). RME is added to other earnings in the earnings period to the extent that it is not covered by the Qualifying Amount, QA; see NIM05810.

Other kinds of transaction in favour of the employee

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