Simon Pavey
Website Marketing Manager
Every business wants to be profitable, to not overspend on acquiring assets, and to have their employees feel safe and supported. Grey fleets could be one good way of ticking all these boxes at the same time, however whether or not this is true can vary from business to business.
In this article, we’ll examine the pros and cons of grey fleets, first explaining what they are before sharing our tips on how to manage them.
A grey fleet describes fleet vehicles that are owned by a company’s employees and driven for business purposes, as opposed to vehicles that are used for business activity and owned by the business as assets.
While this might not seem a huge distinction given that businesses typically compensate drivers who use their own vehicles, there are many legal and technical considerations to factor in when determining whether to use a grey fleet.
The latest Benefit-in-Kind HMRC data indicates that there were around 840,000 company car drivers in the tax year 2023 to 2024, down from 960,00 in the tax year 2015-2016 (the final year before the introduction of voluntary pay rolling).
If you’re deciding against offering company cars to your employees, as many businesses do, then one popular reason for this could be that you instead offer a monthly cash allowance to your drivers that matches or improves upon the financial position they would be in if using a company car. Whether this is the case can vary from business to business.
Typically, fleet operators will rely on the Advisory Fuel Rates (AFR) to calculate what costs would be paid on company car fuel, and consider this alongside relevant taxes to come to a decision on whether to purchase and utilise company vehicles.
It’s also important that the use of the vehicles is considered. Driving a personal car to the post office for business use is, legally speaking, very different to doing it for personal use. So, which way should fleet operators swing?
How, then, do you know whether using a grey fleet is a good move for your business? Well, as a rough rule of thumb, using grey fleet cars is often most beneficial if your business does not have high business mileage. Let’s dive into exactly why:
The obvious pro associated with using a grey fleet is that it’s potentially much cheaper than using company cars. The process of purchasing new company vehicles, maintaining those few vehicles, and acquiring the relevant insurance, can become extremely costly.
Grey fleets require employees to cover the costs of the initial purchase, insurance and ongoing maintenance. Find out a full list of car running costs here.
If your drivers are only making a handful of trips each month, then the chances are that it’ll be significantly cheaper to simply reimburse them for their fuel and maintenance expenses than it would be to move them over to using company cars as standard.
That said, to maximise this cost benefit and ensure that your drivers are only being reimbursed for business miles, it’s essential to have proper vehicle tracking in place. This is necessary, also, to make an assessment of whether a grey fleet model is right for you. For more help with tracking your fleet, view our vehicle tracking service.
So, grey fleets can help you save money. It’s important, though, that employers are mindful of the fact that there are legal processes required to facilitate a grey fleet – it isn’t just a case of drivers being entirely responsible for their own safety.
As an employer, the Government’s Health and Safety Executive body decrees that you have a ‘responsibility to take all reasonable steps to manage risks’ posed to employees while driving for business purposes – in a similar fashion to how you would in an office workspace.
Consequently, employers typically have to implement a safety policy, and often work this into their contractual relationship with grey fleet drivers. This applies even if the drivers are subcontracted. As an employer, you’ll need to check:
It’s worth noting that European driving licences are typically valid for three years in the UK before a UK licence is required, whereas this only applies for one year for countries outside of Europe.
Read ‘How to use Motia’s vehicle safety checks for fleet safety’ here.
If you’ve made a decision to explore the option of using a grey fleet a little further, or if you’re dead set on rolling a grey fleet policy out, check out our tips first.
At Motia, we specialise in supporting fleets across the country – grey or otherwise. Our range of advanced fleet services can help fleet managers with everything from servicing and maintenance to advanced telematics. We also offer:
If you’re serious about improving efficiency in your fleet operation, contact our friendly experts to see how we can help. We’re also the UK’s largest independent provider of fuel cards, which can help you cut fleet fuel costs on every mile.
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