Grey Fleet - An Overview

Using private cars for business travel

Most organisations will, on occasions, find it highly convenient to allow staff to use their private car for business travel.

In terms of administration and cost, paying a fixed mileage allowance for the use of a private car can be the simplest solution rather than providing pool cars or arranging for a daily rental vehicle.

However there are several issues relating to grey fleet which require careful management.

Cost
Employers are able to reimburse up to 40p per mile for the first 10,000 miles per annum and 25p per mile thereafter without any benefit in kind tax implications for the employee or Class 1A National Insurance implications for the employer.

Employers should consider that for journeys above about 80 miles in a day it might be cheaper to use a daily rental car rather than requesting employees use their own vehicle.
Consider also that for many employees the opportunity to claim 40p per mile, compared with the marginal cost of driving an extra mile of probably less than 20p, is in itself an incentive to travel further.

Despite this, for many staff which travel short distances or travel infrequently, use of private vehicles will remain an important and convenient option.

Health and safety
If employees’ cars are used for business travel, the employer still has a duty of care to ensure that the car is fit for purpose, has a valid MOT (if applicable), is insured for business use and that the employee has a valid driving licence.

It is vital that organisations ensure they have appropriate checks in place to meet their legal responsibilities.

Environment
Grey fleet vehicles, on average, will be older and create higher emissions than company vehicles or daily rental vehicles. This combined with mileage rates, which may create the incentive for additional travel, means that companies should look carefully at the impact grey fleet travel has on total emissions.