Employee Car Ownership Schemes

Mackle

I've been offered a position by a company that cites an "Employee Car Ownership Scheme" as one of their main benefits, and I'm trying to understand the pitfalls of this type of scheme.

When I try doing a google search, the only information that I get is from the employers fleet management perspective rather than the employees.

This particular organisation gives a benefits allowance to each employee, and employees can use some of this on a car. From what I can make out, ECO schemes are company car tax exempt and are a credit sale agreement, but I don't understand how this works in practice and what the effect on an employees credit history / rating would be from such a scheme.

I currently run a 21 year old Saab 9000 so whilst having the opportunity to replace it with a cleaner and more economical ULEV initially sounds good, I don't want to negatively impact my credit score in the process.

Running-cost wise, it is described as "the opportunity to own a car with the benefits and peace of mind of a company car" so presumably servicing and insurance is covered.

Has anyone got experience of these schemes and how they work from the employees perspective?

BeenThroughItAll

It's a lease scheme operated by the company on a salary-sacrifice basis, normally.

Mackle

BeenThroughItAll wrote: »

It's a lease scheme operated by the company on a salary-sacrifice basis, normally.

But aren't lease schemes subject to BIK on the car though?

BeenThroughItAll

Mackle wrote: »

But aren't lease schemes subject to BIK on the car though?

Not a clue, I've never wanted a lease car in my life and I'm afraid I'm no accountant.

bigadaj

Mackle wrote: »

But aren't lease schemes subject to BIK on the car though?

Yes the only real saving is the NI, and obviously the normal advantages or disadvantages of running a company car.

Slasher sacrifice is being withdrawn currently for most things apart from pension and childcare I believe so it's probably not a long term issue in any case.

Mackle

In this instance, it's not a salary sacrifice scheme because it comes out of the benefits allowance which is separate to the salary, and it's not a company car because there is a "credit sale agreement" and it's BIK-exempt.

But if there is some kind of credit agreement, then I would have expected some kind of credit history / rating effect from that.

Mackle

Think the scheme is run by Alphabet, and is called AlphaDrive.

Fosterdog

If you want to know more from an employees point of view it may be worth you waiting until you have started and speak to some of your colleagues and see if any of them use the scheme.

Where I work has a similar scheme, I've not looked into it as I don't drive but a few of my colleagues use it but from what I can gather it does seem to be more the petrol heads who like to change their cars quite often and they are allowed to change vehicles either an upgrade or downgrade once a year. I don't know of any who have used it to keep a car long term so I'm guessing the buy out options at the end are not the best but for the ones who changed cars regularly anyway they seem to like it.

bigadaj

Mackle wrote: »

In this instance, it's not a salary sacrifice scheme because it comes out of the benefits allowance which is separate to the salary, and it's not a company car because there is a "credit sale agreement" and it's BIK-exempt.

But if there is some kind of credit agreement, then I would have expected some kind of credit history / rating effect from that.

So speak to the employer about a more detailed explanation and if necessary the lease supplier.

The benefits package is normally tied up with the salary as the overall remuneration in any case, that's the only way you can determine whether you want to accept the role and most benefits are taxable in one manner or another.

It may be that it's some form of lease or hire purchase and a large company has the scale to gain advantageous terms, but could be that you are personally tied in for the period of the Hp or lease whereas a company car is paid for by the employer who has to continue should you leave.