This section of the Volkswagen Guide to good Fleet Management looks at the issues of managing the grey fleet - generally accepted as those vehicles (almost always cars rather than vans) owned by employees and used for business travel on behalf of their employer, in exchange for some level of reimbursement.
There are no really accurate definitions, since the scope of employees' car use is even wider than in what we think of as the normal company car model. "Grey fleet" is a term that's almost uniquely British: across the world the vast majority of business travel by motor car is done in employees' own cars.
In the UK, the long-term dominant position of the company car as a taxable benefit has tended to overshadow the size and importance of the grey fleet. In fact, the statistics provided by HMRC suggest that around 4 million employees use their own cars for business and make formal mileage claims under schemes registered with tax offices. That compares to around 2 million company cars.
There are significant differences in average mileage patterns: the national average for a company car is around 8,000 business miles pa, while for the whole grey fleet, the average is just about 2,000 claimed business miles pa. Around 2.5 million cover less than 4,000 business miles pa.
A number of factors have been acting recently to bring this form of business travel under much greater scrutiny. The increasing attention to Health & Safety/ Duty of Care, and concerns over total greenhouse gas emissions, coupled with the development of many schemes which seek to combine the best of grey and conventional fleet elements have raised awareness to the level when it is even a hot topic for HMRC.
Just as there are many different types of company car scheme, so there are many faces to the grey fleet:
- Where business mileage is relatively small and often on an infrequent basis
- Employees of businesses (often global/ multi-national groups) who do not subscribe to the UK company car culture
- Businesses using mostly part-time workers with relatively modest business mileage patterns
- Where employers are anxious to provide the most flexible package of remuneration to their employees
- Public sector employers where any private use supported from public monies is inappropriate
- Employee/ employer groups who have identified that this offers a more tax-efficient solution than a conventional company car scheme (these are usually in structured schemes such as Employee Car Ownership Schemes <ECOS> where the employer provides a formal system)
These - and many other circumstances - are perfectly legitimate reasons for not providing company cars in the normal way. As we have seen running a fleet requires significant budgets which need to be committed over periods of years. A grey fleet operation is often a much more flexible and cost-effective route.