The cost of running a Grey Fleet

What are the financial and environment implications of running a Grey Fleet?

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.

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.

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.


Businesses are spending around £5.5 billion a year* on Grey Fleet which highlights just how popular this mode of transport is.

The environmental impact of running a Grey Fleet

The grey fleet is an ageing fleet that is typically a high polluting form of travel. The average age of a grey fleet vehicle is 8.2 years old compared with 1.6 years for lease cars and 0.7 years for rental cars*. The BVRLA states that the average grey fleet vehicle emits 21% more CO2 than the average lease car.

Companies with net zero targets to meet will need to get to grips with their grey fleet, adapt policy and enforce change.


What can you do about it?

Here are 5 tips to help you gain control of your grey fleet.

  1. Review

Gaining up to date information about your drivers is absolutely essential. You need to know what your grey fleet landscape is right now as there are likely to have been significant changes since you last reviewed it. We suggest reviewing your employees to understand their driving patterns and ask them to declare whether they drive their own vehicle for business purposes. We can do this for you through our Driver Audit service.

  1. Offer alternatives

Are you offering adequate alternatives to grey fleet? Think about pool cars, rental cars and public transport. Any changes you make must be updated in the driver policy, communicated and agreed to by your drivers.

  1. Restrict certain vehicles

It’s possible with a system like DAVIS to automatically accept (or reject) cars based on engine size, model, emission, and age – if the grey fleet vehicle doesn’t fall within your grey fleet guidelines outlined in your driver policy, then it should not be used for business travel.

  1. Track mileage

Record and monitor mileage claims so you have visibility of grey fleet costs.

  1. Get checking

Make sure you’re carrying out the legally required compliance checks on the grey fleet driver and the vehicle – this information should be stored and easily accessible as an audit trail.


Managing a Grey Fleet can be seen as problematic, complicated and time consuming which is usually the reason it is put to one side and forgotten about. DAVIS is a smart, uncomplicated solution which will do all the heavy lifting for you. Book a demo or get in touch to see how.