It is important to ensure that pool cars and pool vans are correctly treated or you could be issued with penalties from HM Revenue and Customs. If a car or van meets the criteria as being “pool” it means that no taxable benefit arises on its use.

Below is a summary of the criteria that needs to be met for both pool cars and pool vans.

Criteria for a pool car:

For a car to qualify as a pool car it needs to satisfy all of the following conditions:

• It is made available to, and is actually used by, more than one employee,
• It is made available, for each of those employees, by reason of their employment,
• It is not used predominantly by one employee to the exclusion of others,
• Any private use of the car is merely incidental to its other use,
• It is not normally kept overnight at or near to the employees’ home

It is possible that the vehicles need to be taken home at night rather than kept at the business premises as they are not secure overnight. However, it is often difficult to persuade H M Revenue & Customs that a company car charge does not arise when it is kept overnight at employees’ homes, no matter what the circumstances.

By stating that any private use of a car must be merely incidental to its other use, the private use should be connected to business use and the private element should be small in comparison to the business mileage. Journeys to and from work are classified as private use, unless the employee is travelling to a temporary place of work.

An agreement can be produced which is signed by the company and countersigned by each employee stating that any private use of the company’s vehicles is strictly prohibited. The cars should be made available to all employees and insured as such. A log should be maintained of their use along with their overnight locations which can be provided to HM Revenue & Customs if required.

If a car does fail to meet these conditions then it will result in a taxable benefit for every person who used the car for private use which must be declared on form P11D.

Criteria for a pool van:

The same criteria as above for a pool car also apply to a pool van.

However, insignificant private use of a pool van is less stringent than incidental private use of a pool car. For example, a pool van may be driven home to allow for an early start the next morning. However, private use should be incidental to a business journey.

We would again recommend mileage logs are maintained along with records of where the vans have travelled.

If uncertain, Barnes Roffe can complete a PAYE health check to ensure that the relevant conditions are met. If you would like to know more, please contact your Barnes Roffe partner.