September 30, 2024
Sara Davies
Articles
Pool cars are a great way of saving money, increasing efficiency, and improving business flexibility. However, there can be a fair bit of confusion about pool cars. We’ve summarised all you need to know about them in our list of 10 helpful things to know:
1. A pool car can be another type of vehicle
A pool car doesn’t need to be a car; the term can cover all vehicles including vans.
2. A pool car can be a leased vehicle
A pool car can be a vehicle owned by a business or a vehicle leased by a business. As long as the finance company is made aware and the vehicle is fully insured by the company, there is no reason to prevent a leased vehicle from being used as a pool car. There are rules and regulations surrounding its use; some of these are related to pool cars and HMRC, while others relate to pool cars and leased vehicles specifically. Both cases are outlined in the rest of our points below.
3. A pool car is for business use only
The HMRC stipulates that a pool car must be used for business only. This is of key importance, since it is what differentiates the pool car from the company car, more of below.
4. Drivers of pool cars do not pay company car tax
With a traditional company car, the employee has to pay benefit in kind (BIK) to cover access for personal use. The company also has to contribute additional funds towards the employee’s national insurance contributions. A pool car however, is not considered by HMRC as a perk due to the vehicle only being available for business use, therefore employees are not liable for the benefit in kind payments.
If you are reading this article as a business considering introducing a pool car, ensure you create a pool car policy so that all employees understand the tax regulations. Otherwise you run the risk of HMRC classing the pool vehicle as a traditional company car which includes company car tax implications.
5. A pool car must always be available to multiple drivers
Pool cars are not to be used exclusively by one or two employees in a tax year, therefore a pool car must have recorded use by multiple drivers to meet legal and tax criteria. This is to ensure the pool car is being used to genuinely meet the business requirements of the workforce, rather than as a company car by another name.There is detailed guidance on this and all the HMRC criteria here.
6. A pool car must keep an accurate logbook
It is important that accurate records of pool car usage are maintained at all times for legal and tax purposes. These should include, for each trip:
- Who is driving the car
- Journey date and time
- Mileage of the trip
- The vehicle’s routes
- Reasons for travel
- Refuel requirements
It is a good idea to invest in a tracker to see if the log book in the car is being kept up to date and to challenge any discrepancies in mileage.
7. A pool car is the company’s responsibility
A pool car is in the company’s name and the company is therefore responsible for keeping it in good condition, not the drivers. The company needs to ensure it is not damaged and if it is, that they have the necessary paperwork and protocol in place to recover costs.
8. A pool car must normally be kept at the business premises overnight
A company pool car must be kept at the business premises overnight and not at an employee’s home, unless that employee will be going somewhere other than his usual place of work for business reasons. There are HMRC rules on how many nights that will be allowed, regardless of reasons given, so check these HMRC rules thoroughly.
9. A pool car must be fully insured by your company
The employer will need to insure the leased vehicle on a fleet policy and to ensure their liability for the asset is fully covered for the full range of business driving requirements of the employees with access to the car.
10. A company with a pool car is liable for all costs
All costs including insurance excess, damage identified at collection, excess mileage and maintenance charges not covered within the lease maintenance package will be the company’s legal responsibility. It is therefore advisable that a company offering its employees access to pool cars keeps full records regarding usage of the vehicle.
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