There are five conditions that must be met for a car to be treated as a pool car for tax purposes.
The car is made available to, and actually used by, more than one employee.
In each case, it is made available because of the employee’s employment.
The car is not ordinarily used by one employee to the exclusion of the others.
In each case, any private use by the employee is merely incidental to the employee’s business use of the car.
The car is not normally kept overnight or near any of the residential premises where any of the employees were residing (subject to an exception if kept overnight on premises occupied by the person making the cars available).
The tax exemption only applies if all five conditions are met.
When private use is ‘merely incidental’
Private use of the car is disregarded as long as it is ‘merely incidental’ to the employee’s business use of the car.
A good example of this would be if an employee was required to make a long business journey and took the car home the previous evening in order to get an early start, the private use comprising the journey from work to home the previous evening would be regarded as ‘merely incidental’ – the car has been taken home to facilitate the business journey the following day.
Kept overnight at employee’s homes – the 60% test
For a car to meet the definition of a pool car, it must not normally be kept overnight at employees’ homes. However, as long as the total number of nights a car is taken home by employees, for whatever reason, is less than 60%; HMRC will generally accept that the condition has been met.
