A car is not considered to be available for private use
if it is a pooled car. So no assessable benefit arises from its use.
A car only qualifies as a pool car if all the following conditions are satisfied:
(a) It is available to, and actually used by, more than one employee.
(b) It is made available, in the case of each of those employees, by reason of their employment.
(c) I it is not ordinarily used by one of them to the exclusion of the others.
(d) Any private use by an employee is merely incidental to their business use of it,
and
(e) it is not normally kept overnight on or near the residence of any of the employees unless it is kept on premises occupied by the provider of the car.
The meaning of ‘merely incidental to’ and ‘not normally kept overnight’ therefore become of utmost importance.
Meaning of ‘merely incidental to’
The expression ‘merely incidental to’ imposes a qualitative rather than a quantitative test. The use of a car for what is primarily a business journey but embracing some limited private use would be within the terms of (b) above. A simple example might be where an employee who is required to undertake a long business journey is allowed to take a pool car home the previous night in readiness for an early morning start. The office to home journey although private is, in this particular context, subordinate to the lengthy business trip the following day and is undertaken to further the business trip. In short, it is merely incidental to the business use of the car on that occasion. A reservation is necessary in this type of case: if it happened too often, condition (e) above would not be met.
Meaning of ‘not normally kept overnight’
It is accepted that a car is not normally kept overnight at or near the homes of employees if the number of occasions on which it is taken home by employees does not amount to more than 60% of the year. But where a car is garaged at the employees’ homes on a large number of occasions, although for less than 60% of the year, it is unlikely that all the home to work journeys would satisfy the ‘merely incidental to’ test stated above.
Exception: Where a chauffeur employed to drive pooled cars is obliged to take a pooled car home for retention overnight, the purely private use by the chauffeur in travelling between their normal place of work and his or her home would not of itself be regarded as disqualifying the car from treatment as a pooled car. Equally, the fact that in such circumstances the car was kept overnight at the chauffeur’s home would not normally be regarded as disqualifying the car from counting as a pooled car.
Inadequate parking facilities etc.
Subject to the exception mentioned 15.4 above all five conditions above (a) to (e) must be satisfied if the car is to qualify for exemption as a pooled car. So a car which met the tests at (a) to (d) but which was normally taken home at night by an employee because of inadequate parking facilities at the employer’s premises, would fail test (e) and would thus not count as a pooled car.
Please note the 60% test is no more than a rule of thumb that you can apply in order to reach a reasonable settlement in most cases.
It is a difficult area, rather ambiguous and to reiterate, the Inland Revenue also say ‘Note that if a car or van is taken home often enough to approach the 60% limit, though without breaking it, it is unlikely that all the home to work journeys will satisfy the merely incidental test’. They then go on to point out that any appeal before the Commissioners, would rely on the statutory definition rather than this rule of thumb.
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