Sellers concern recruitment disaster as Treasury targets worker automobile profit scheme

Dealerships are warning of a looming recruitment and retention disaster following the federal government’s resolution to scrap worker automobile possession schemes (ECOS), a profit extensively used throughout the motor retail sector.

In line with new analysis by Startline Motor Finance, 45% of sellers imagine the tip of ECOS will immediately hurt their capability to draw and preserve employees.

The schemes, which permit dealership workers to drive new vehicles at closely discounted charges with out triggering benefit-in-kind tax or Nationwide Insurance coverage contributions, have been a key incentive for workers throughout the trade.

The Treasury introduced final 12 months that it will abolish ECOS from April 2026, claiming they have been “contrived” and primarily designed to keep away from tax.

Nevertheless, the automotive sector says the transfer dangers eradicating an important perk at a time when dealerships are already going through important staffing challenges.

“These schemes have helped hundreds of workers afford a brand new automobile whereas giving sellers a helpful pipeline of well-maintained autos for resale,” stated Paul Burgess, CEO of Startline Motor Finance.

“Eradicating that profit with out a clear alternative goes to make recruitment even more durable for an trade already underneath strain.”

The federal government has but to publish particulars or maintain a session on how the change can be applied, regardless of pledging to take action over six months in the past.

Whereas some within the trade agree the schemes have been problematic – 35% of sellers surveyed stated that they had considerations about ECOS even earlier than the Treasury’s announcement – others view the transfer as a part of a broader sample of coverage selections making life tougher for sellers. These embrace will increase to employer Nationwide Insurance coverage and the Nationwide Minimal Wage.

Regardless of the uncertainty, some dealerships are taking proactive steps. Practically one in 4 sellers (24%) say they’ve already changed their ECOS with a distinct employees profit, hoping to keep up their attraction as employers in a aggressive market.

The federal government expects the transfer to spice up tax income by £275 million within the first 12 months after implementation, falling steadily to £175 million by 2029/30.

However trade leaders are questioning whether or not the monetary acquire is definitely worth the danger to workforce stability and the broader well being of the automobile retail sector.

“There’s little doubt that ECOS wanted reform, however eradicating them altogether with out offering a viable different dangers harming the very folks the trade depends on most,” stated Burgess.

The findings come from the Startline Used Automobile Tracker, a month-to-month survey produced in partnership with APD World Analysis, which gauges sentiment amongst used automobile sellers on market developments and coverage developments.