A pool vehicle must meet the following conditions to be exempt from being categorised as a benefit in kind:
- The vehicle is made available to, and is used by, more than one employee and evidence of use is kept.
- The vehicle is made available to employees by reason of employment. A personal relationship with an employer will not satisfy the requirement.
- The vehicle must not normally be kept overnight at home. HMRC guidance indicates that a vehicle may be kept at employees’ homes for up to 60% of nights in the year. However, this applies to all employees not just one.
- There should not be exclusive use of a vehicle.
- Any private use of the vehicle must be merely incidental to business use*.
All five requirements must be satisfied.
*Examples where HMRC deem private use as ‘merely incidental’ to business use when:
- An employee is staying away from home overnight due to a business trip and they use the car to go out for a meal in the evening.
- The employee takes the car home overnight in order to make an early start on a business trip the following morning.
HMRC consider that less than 5% of the vehicle’s annual mileage should be undertaken for private use.
It is essential that the employer keeps sufficient records documenting how a pooled vehicle is used as HMRC may request the records on an inspection. Keeping a log book which requires employees to note the dates a vehicle is used and the purpose of the journey, together with keeping records of the business miles travelled, will help demonstrate that a pool vehicle meets the conditions.
If you have any queries on the information contained in this article or would like assistance please contact Colin Evans on 01633 654165 colin.evans@kilsbywilliams.com
Alternatively, please contact your usual advisor on 01633 810081 or email info@kilsbywiliams.com.
