ACCA Advanced Taxation (ATX) Practice Exam

Is there a car benefit on pool cars?

1. Yes, always

2. No, there is no car benefit

3. Only if used more than 30 days

4. Yes, if provided to employees

The correct answer is: No, there is no car benefit

A pool car is a vehicle that is made available to employees, generally for business purposes, and is not assigned to any one employee for their exclusive use. The key characteristic of pool cars is that they must be available to multiple employees and not used as a personal vehicle. In most tax jurisdictions, the use of a pool car does not create a car benefit subject to tax. The primary reason is that as long as the vehicle is available to employees solely for business use and is not available for private use, tax authorities do not consider it a taxable benefit. The absence of a car benefit means that employees can use the vehicle for work-related tasks without incurring additional taxable income attributed to the car’s availability. This significantly encourages the use of shared vehicles within the company, as it promotes efficiency and reduces the administrative burden of assigning cars to individual employees. For situations where a car is identified as a pool car, it must meet set criteria, such as being made available to all employees and not being available for personal use beyond incidental private use. This criterion reinforces the idea that there is no car benefit associated with true pool cars.