The Pool Car Mistake That Could Cost You Thousands
If your business owns a vehicle, you may have heard of the term pool car. A pool car is a company vehicle that can deliver genuine tax savings—but only if it meets HMRC’s strict criteria. When a car qualifies as a pool car, it isn’t classed as a benefit in kind (BIK), meaning your employees avoid additional income tax and your business avoids extra National Insurance Contributions (NICs).
However, many directors and business owners misunderstand what actually counts as a pool car. In fact, at 1 Accounts, we find that 9 out of 10 businesses claiming to have a pool car don’t actually qualify under HMRC’s rules—leaving them exposed to unexpected and costly tax bills.
In this guide, we’ll explain exactly what a pool car is, the common mistakes that stop a vehicle from qualifying, and the potential tax liabilities if HMRC decides your “pool car” is actually a personal benefit.
What Is a Pool Car?
A pool car is a vehicle owned by a business that is:
Available to multiple employees
Used strictly for business purposes
Not allocated to any one individual
Kept on business premises overnight
Meticulously logged for mileage
When a car qualifies as a pool car, it is not considered a benefit in kind (BIK)—meaning there’s no additional income tax for the employee or National Insurance Contributions (NICs) for the company.
The Reality: Most “Pool Cars” Don’t Qualify
In our experience at 1 Accounts, 9 out of 10 businesses attempting to use a car as a pool car don’t meet HMRC’s strict requirements. The most common red flags include:
The car is taken home by the director “for security.”
It's used for weekend family trips.
Mileage logs aren’t kept.
Only one employee is eligible to drive it.
The car is registered in the director’s name.
These mistakes turn what might be intended as a pool car into a personal benefit, which opens the door to significant tax liabilities.
A Costly Mistake: What the Tax Bill Could Look Like
Let’s take a real-world example.
If 1 Accounts were to purchase a Porsche 911 for £100,000, and claim it as a pool car by:
Insuring it for all employees,
Storing it overnight at our Haverhill office (The EpiCentre),
Keeping strict mileage logs,
And ensuring it’s only used for business...
…then it could qualify as a legitimate pool car.
But let’s flip the script.
Suppose a director registers the same Porsche in their own name, uses it personally, and doesn’t maintain any logs. That car would now be a taxable benefit.
Here’s what the tax hit could look like:
Benefit in kind value: £100,000 x 37% = £37,000
Director's tax (40%): £14,800
Employer NIC (13.8%): £5,106
Total tax cost: £19,906
*And that’s before any fuel benefit charge is added.*
Want to Stay on the Right Side of HMRC?
We’ve created a helpful Pool Car Compliance Checklist to help you assess whether your business vehicle meets HMRC’s criteria.
Final Thoughts
While a pool car can offer legitimate tax advantages, it’s only viable when used strictly within HMRC guidelines. Attempting to bend the rules can result in a significant and unexpected tax bill.
At 1 Accounts, we help business owners stay compliant and make informed decisions. If you’re unsure whether your business vehicle qualifies as a pool car—or you just want a second opinion—get in touch.
