Fleet News

Salary sacrifice could solve the grey fleet headache

Zenith told delegates at Fleet Management Live of the potential benefits of using salary sacrifice in the place of grey fleet vehicles, and why outright ownership may not be a good choice for some. 

Claire Evans, head of fleet consultancy at Zenith, also encouraged fleet managers to examine all of the options available to them.

She said: “Your businesses are very different and there are different elements to them.

“With the way technology is today, there’s not so much administration in running more than one funding method.

“So why not look at different funding methods and which ones work for different parts of your business and different types of drivers.”

Evans said that salary sacrifice can be a good option for grey fleet drivers, for example. 

“Because of the reduction of gross income of the employee it’s a nice way to see a reduction in costs for them without any extra cost to business,” she added.

According to Evans, using salary sacrifice to replace grey fleet cars can also have benefits in regard to compliance.

“From a duty of care perspective, if you do have drivers that are using their cars on business, salary sacrifice means instead you can ensure that they’ve got a fully insured car and that it’s maintained properly and that it’s fit for purpose for business use.”

For fleets which outright purchase their cars, Evans suggested that business examine their fleet and determine if owning their own vehicles is the best option or not.

Ownership against leasing is an issue of particular importance to expanding businesses.

Evans said: “So if you outright purchase a vehicle today and you’re looking to expand your business and to grow your business, and you need to make a significant investment – why tie up that cash in your vehicle fleet?

If you move over to leasing or rental, it frees up that capital.”

According to Evans, leasing a vehicle opposed to outright ownership can also reduce costs in the future: because the financial risk when the vehicle is eventually de-fleeted is placed upon the leasing company, not the business using the car.

“You hand the car back and regardless to what the resale on that vehicle is, you won’t see the cost of that,” said Evans.

“It’s the leasing company who will take the risk.”

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