Most businesses operate a grey fleet in some form or other, however it is often seen as problematic or low priority and tends to be ignored or left to manage itself. The fact is, if the grey fleet is ignored or unmanaged, companies will fall short of their legal obligations and not only encounter spiralling costs but will also find that it disrupts their net zero targets.
What is a Grey Fleet?
Grey fleet is a term that describes a private vehicle being used to cover business journeys. This could be a single journey every few months, or regular trips that cover thousands of corporate miles annually. In each case, although the vehicle belongs to the employee the employer remains responsible and is required to check that the vehicle is insured, taxed and MOT’d when used for business journeys. This is in addition to checking that the driver is eligible to drive.
There are three types of Grey Fleet:
Cash Allowance
The employee is eligible for a company car but opts for a cash payment.
Formal
The employee doesn’t qualify for a company car so uses their private vehicle for business journeys. Mileage based reimbursement is usually provided for this mode of business travel.
Informal
The employee drives their own vehicle for occasional work journeys. Some employers pay mileage rate, some will reimburse fuel costs only.
The financial impact of running a Grey Fleet
Businesses are spending around £5.5 billion a year* on grey fleet which highlights just how popular this mode of transport is. Without proper management, and proper processes in place, it’s impossible to quantify the true cost associated with grey fleet. And without knowing how much it’s costing you financially, how can you work towards reducing spend?
So what are the costs?
It is estimated that 12 billion grey fleet miles* are driven each year and as per the HMRC’s Approved Mileage Allowance Payments scheme, grey fleet drivers can claim 45p per mile for the first 10,000 business miles they drive and 25p thereafter, which can quickly mount up.
Grey fleet reimbursement is generally far higher than other modes of transport and claims tend to be exaggerated so it’s extremely worthwhile reviewing your driver policy to establish the most appropriate method of transport. Pool cars and public transport can be great alternatives to grey fleet.
