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HMRC internal manual

Employment Income Manual

HM Revenue & Customs
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Employee Car Ownership Schemes (ECOS): tax relief for expenses of business travel

Section 359 ITEPA 2003

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.

Mileage expenses of business travel

The only tax relief available to an employee for business mileage expenses in an employee’s own vehicle is via the AMAPs exemption (EIM31205) or Mileage Allowance Relief (MAR, EIM31330). The kinds of expense covered by this are detailed at EIM31210.

The level of actual expenditure is disregarded. No additional tax relief is available for the actual cost of business mileage, including associated costs such as the business proportion of insurance, where this exceeds the relief available. Equally, there is no tax charge to recover excess relief given where relief available exceeds actual costs.

Non-mileage business travel expenses

This kind of expense is detailed at EIM31215 and is dealt with under the normal travel rules, see EIM31800.

Tax relief for expenses of ownership or acquisition of the vehicle

No relief is available for interest paid on a loan to acquire the vehicle.

Also, capital allowances are not available to employees on private vehicles.