Introduction to this document

Pool car policy

If you provide pool cars that your staff can ask to use when they need to carry out business-related journeys, it’s important to have a policy in place covering the provision and use of your pool cars.

What are pool cars?

A pool car is essentially a company vehicle that’s available for occasional use by more than one employee when they need to undertake journeys on work-related business in the performance of their job duties. If an employee is regularly required to travel on business, you’ll probably have provided them with a company car for their exclusive use and for that you should use our Cars and Car Allowances Policy to set the terms and conditions of its use. On the other hand, pool cars are company assets that can be used by all staff, subject to any qualifying conditions you may impose.

HMRC position

HMRC is keen to ensure that employees don’t use pool cars as their regular company vehicles in an attempt to evade company car tax. Therefore, to be treated as a pool car under HMRC rules, in any given tax year the vehicle must:

  • be made available to, and actually used by, more than one employee
  • be made available to each employee by reason of their employment
  • not ordinarily be used by one employee to the exclusion of the others, and
  • not normally be kept overnight at or in the vicinity of an employee’s home.

In addition, any private use of the pool car in the year by any of the employees concerned must be “merely incidental” to their business use in the year, e.g. if the car is taken home in the evening to allow an early start on a business trip the following morning. If a vehicle is classed as a pool car, there’s no benefit in kind tax charge on it. However, if even one of these conditions isn’t met, the car will fail the pool car test and any employees who had private use of it will be taxed on their private use.

Pool car policy

We’ve used our cars and car allowance policy as the foundation for our Pool Car Policy, and therefore many of the provisions that it contains are almost the same. However, we’ve amended it as necessary to reflect the fact that what is simply being provided is access to a pool car, not a company car. Our new policy therefore covers such additional matters as: the pre-requirements involved prior to using the pool car; the procedures required to be followed to book and use the pool car, including collection and return of the car and logging business journeys and mileage; making clear that the pool car is not for the exclusive use of one particular employee; limiting use of the pool car to work-related business only, banning private use and requiring it to be kept overnight on your business premises (except in exceptional circumstances); and fuel cards and re-fuelling.