An industry specialist has raised concerns that significant automotive brands are worried about potential job losses due to upcoming changes in the sector.
Authorities are being urged to reconsider proposed amendments to vehicle benefit taxation that could impact many workers across the UK.
The proposed legislation, unveiled by HMRC in July, plans to classify employee car ownership schemes as typical company vehicles for taxation.
The new regulations, set to commence on October 6, 2026, would subject these schemes to Benefit-in-Kind taxation.
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This move follows the Chancellor’s Autumn Budget promise to close what has been described as a “loophole” in the current system.
According to HMRC estimates, around 76,000 employees across 1,900 companies currently engage in these programs.
These schemes are especially popular within the automotive manufacturing and dealership sectors, where employees can acquire vehicles at a substantial discount off the retail price.
The government expects these measures to generate £275 million in the first year of implementation, with annual revenues of £220 million, £195 million, and £175 million projected through to 2030.
Top executives in the automotive industry have questioned the Treasury’s revenue forecasts, arguing that the policy could backfire financially.
Robert Forrester, CEO of Vertu Motors, has directly addressed Treasury officials, warning that the changes could suppress demand for new vehicles and destabilize the used car market.
In a LinkedIn post, Forrester challenged the government’s assertion that the changes would have minimal economic impact.
He stated: “The belief that this adjustment will not significantly affect the macroeconomy is, in our view, incorrect. Our primary conclusion is that the change is more likely to decrease rather than increase revenue for the Exchequer.”
Vertu Motors’ own analysis shows a stark difference between Treasury expectations and potential actual outcomes. The company, which has nearly 250 employees participating in car ownership programs, estimated that moving these employees to standard company car arrangements would reduce annual tax receipts per employee from £32,500 to £4,505.
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This significant reduction could result in the government losing almost £7 million in revenue from Vertu Motors alone.
Mr. Forrester emphasized that these employee schemes currently account for approximately five percent of all new vehicle registrations in Britain, while also supplying a significant portion of the nearly-new car market.
The leader in the automotive sector stressed that eliminating these programs would have extensive consequences beyond simple tax collection.
Market disruption could affect both new vehicle sales and the broader used car ecosystem, potentially undermining the Treasury’s revenue targets rather than meeting them.
Motor industry consultant Anthony Cox from RSM UK echoed concerns, stating: “ECOS often made vehicles more affordable for employees, especially in motor retail, so removing these schemes could lead to fewer cars being available to buy through the nearly new market.”
“There are further concerns from car manufacturers that the impact of these changes may have a knock-on effect on jobs across the automotive industry.”
“While we understand the industry made the Government aware of these broader concerns, and despite the stated initial plans to target contrived schemes, the legislation is so broad that it not only removes ECOS as an option, but also raises concerns about its potential impact on PCP arrangements for employees.”
The specialist highlighted an apparent inconsistency in tax treatment, pointing out that workers in other industries can receive their employers’ products at cost price without incurring tax liabilities.
He argued this creates an unequal situation for automotive sector employees. Mr Cox also criticized the implementation timeline, noting businesses would have barely 12 months to adjust before the October 2026 deadline.
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