Many businesses, when they think of fuel cards, envisage either fleets of company car or van drivers using them. But fuels cards can be a useful tool for the biggest group of working drivers: the grey fleet.
Grey fleet is the term used to define drivers who use their own car, or van, for work purposes. There are an estimated 14 million grey fleet vehicles in use, either on a regular or occasional basis.
The grey fleet can seem a cheap, hassle-free way of keeping employees mobile. After all, they pay for the vehicle, and when they use it they just need to claim back for their mileage and other costs.
But it isn’t quite that simple. For a start the grey fleet is usually older and less efficient than a company owned one. Research by the British Vehicle Rental and Leasing Association (BVRLA)shows that grey fleet vehicles average more than eight years old compared to two for leased company vehicles, and emissions (and fuel economy, because the two are linked) is 19% higher.
The total expense claim cost to businesses of the grey fleet is nearly £6 billion, the BVRLA reckons, and so there are a vast number of claims made for grey fleet milage every year.
To see how fuel cards can work for grey fleet drivers, it’s worth looking at how these employees claim back for journeys without them.
Usually they will record their business journey, noting down start and end points, pay for their fuel themselves, keep a receipt and then at some point in the future, fill in an expense form and claim costs back, using either the HMRC advisory fuel rate (the same one used for company cars), or the HMRC mileage allowance payments, which is 45p per mile for the first 10,000 miles and 25p thereafter.
But to understand how and when it might be useful to use fuel cards for grey fleet drivers, it’s a case of breaking down this group into two further sections: cash allowance and occasional.
Fuel cards can work for your driver who has been given a cash allowance to fund their car. Often these drivers are ex-company car drivers who have opted out of the scheme but still do significant business mileage.
They usually can simply claim back the cost of the fuel for their business mileage, without any need to factor in depreciation, servicing and insurance for their car because those costs are typically factored into the cash allowance.
By allowing them to use a fuel card, you can pay for their fuel up front, and then they claim back their private mileage using the advisory fuel rate that relates to the size of their vehicle’s engine. You can find those rates here.
That way, you keep in control of fuel purchasing in just the same way as you would with a company car driver. It means they get access to preferential rates, aren’t paying out business mileage from their own pocket, administration is reduced, and you get clarity over what they bought, when, and for which journeys.
Drivers using their own cars will have funded the purchase of that car privately themselves. As a result, they usually will claim business mileage at the 45p rate set down by HMRC. As a general rule, these drivers do less business mileage, mainly because businesses don’t want employees doing high mileages in their own car, while all the inherent risks this brings in terms of roadworthiness, insurance and wear and tear.
While you could potentially give them a fuel card, you would have to ask the question: do they do enough miles to warrant one, and how do they claim back the costs of insurance, wear and tear and depreciation? And if they are doing those sorts of miles, would you be better off giving them a company car?
Fuel cards could help to change the behaviours of grey fleet drivers, and potentially save your business money too. Various studies have shown that some grey fleet drivers inflate their claims, and at a time when the cost of living (and the cost of servicing and maintaining their car) is high, more could be tempted to claim more to make up for perceived shortfalls.
By using a fuel card, allied to milage recording, you could reduce the chances of this happening, and so increase the accuracy of expense payments.
Whilst many think that fuel cards are just for company car drivers, fuel cards can be used for grey fleet drivers too, and especially those in cash allowance cars. It’s a great way of keeping control of fuel purchases and mileage, and giving the grey fleet driver the benefit of improving cash flow. With Allstar, we look after your fuel, so you can focus on your business. Find the right fuel card solution for your business here.