Where an employ­er pro­vides an employ­ee with a car for their per­son­al use, it is a tax­able ben­e­fit, which results in income tax payable by the employ­ee and Employer’s Nation­al Insur­ance Con­tri­bu­tions payable by the employ­er.

A car is not con­sid­ered to be avail­able for pri­vate use if it’s a ‘pooled car’.

Where a car used by employ­ees is regard­ed as a ‘pool car’ there is no ben­e­fit in kind and there­fore no income tax or NIC payable.

A car only qual­i­fies as a pooled car if all of the fol­low­ing con­di­tions are sat­is­fied:

• It’s avail­able to, and actu­al­ly used by, more than one employ­ee.
• It’s made avail­able, in the case of each of those employ­ees, by rea­son of their employ­ment.
• It is not ordi­nar­i­ly used by one of them to the exclu­sion of oth­ers.
• Any pri­vate use by an employ­ee is mere­ly inci­den­tal to their busi­ness use of it.
• It is not nor­mal­ly kept overnight at or near the res­i­dence of any of the employ­ees unless it’s kept on premis­es occu­pied by the provider of the car.

Employ­ers need to be able to demon­strate to HMRC that the con­di­tions for the car to be a pool vehi­cle have been met, for instance, keep­ing mileage records to show when the car was used, by whom, and for what jour­neys, and records to show where the vehi­cle has been parked.

The car must be kept overnight at a busi­ness trad­ing address or a near­by car park, but it must not be  parked at or near an employ­ee or director’s address, unless the inci­dence of tak­ing the car home is strict­ly nec­es­sary to start an ear­ly busi­ness jour­ney the next day.

To claim that a car is a ‘pooled’ vehi­cle, it is advis­able to:

Main­tain a log of all use of the car and all its jour­ney’s, such as a mileage log­book, des­ti­na­tions, the pur­pose for the use of the car, and the names of the dri­vers.

Have a clear writ­ten pol­i­cy (and adhere strict­ly to it) stat­ing that the car is for busi­ness use only.

Have a clear sys­tem for the car keys to be locked away at the busi­ness premis­es overnight and signed in and out where that car is being used by employ­ees.

If you would like any more infor­ma­tion about this or any tax issue please con­tact one of our tax team on 0141–332-6331.

You can also browse our oth­er blogs on our web­site:  https://russell-russell.co.uk/blogs/

Take care until the next time

Rus­sell + Rus­sell