Use of company pooled cars or vans (480: Chapter 15)
Find out about more information for the use of pooled cars or vans.
Overview
15.1
Sections 167 and 168 Sections 167(2) and 168(2)
In this chapter references to cars include vans. A car is not considered to be available for private use if it’s a pooled car, therefore no assessable benefit arises from its use.
Sections 167(3) and 168(3)
A car only qualifies as a pooled car if all the following conditions are satisfied:
(a) It’s available to, and actually used by, more than one employee.
(b) It’s made available, in the case of each of those employees, by reason of their employment.
(c) It is not ordinarily used by one of them to the exclusion of the others.
(d) Any private use by an employee is merely incidental to their business use of it.
(e) It is not normally kept overnight on or near the residence of any of the employees unless it’s kept on premises occupied by the provider of the car.
If a car fails any of these conditions it might be regarded as shared car or van (see chapter 12 paragraph 12.38).
Employers need to be able to demonstrate that the conditions for the car or van to be a pool vehicle have been met, for instance by keeping mileage records to show when the car was used, by whom and for what journeys.
The word employee has its ordinary meaning here. The definition in chapter 1 paragraphs 1.7 and 1.8 does not apply in connection with pooled cars.
Meaning of ‘merely incidental to’
15.2
Sections 167(3)(d) and 168(3)(d)
The expression ‘merely incidental to’ imposes a qualitative rather than a quantitative test. The use of a car for what is primarily a business journey but embracing some limited private use would be within the terms of (b) in paragraph 15.1 above. A simple example might be where an employee who needs to undertake a long business journey is allowed to take a pool car home the previous night in readiness for an early morning start.
The office to home journey although private is, in this particular context, subordinate to the lengthy business trip the following day and is undertaken to further the business trip. In short, it’s merely incidental to the business use of the car on that occasion. A reservation is necessary in this type of case: if it happened too often, condition (e) in paragraph 15.1 above would not be met.
Meaning of ‘not normally kept overnight’
15.3
Sections 167(3)(e) and 168(3)(e)
It’s accepted that a car is not normally kept overnight at or near the homes of employees if the number of occasions on which it’s taken home by employees does not amount to more than 60% of the year. But where a car is garaged at the employees’ homes on a large number of occasions, although for less than 60% of the year, it’s unlikely that all the home-to-work journeys would satisfy the ‘merely incidental to’ test in paragraph 15.2.
15.4
Where a chauffeur employed to drive pooled cars is obliged to take a pooled car home for retention overnight, the purely private use by the chauffeur in travelling between their normal place of work and his or her home would not of itself be regarded as disqualifying the car from treatment as a pooled car. Equally, the fact that in such circumstances the car was kept overnight at the chauffeur’s home would not normally be regarded as disqualifying the car from counting as a pooled car.
Inadequate parking facilities
15.5
Subject to the exception mentioned in paragraph 15.4 all 5 conditions in paragraph 15.1 must be satisfied if the car is to qualify for exemption as a pooled car. So a car which met the tests at (a) to (d) in paragraph 15.1, but which was normally taken home at night by an employee because of inadequate parking facilities at the employer’s premises, would fail test (e) in paragraph 15.1 and would thus not count as a pooled car.