We often get asked this question so here is the answer.
A Company Car – is generally a car that is provided by an employer to an employee for business and personal use, whereby an employee pays benefit in kind (company car tax) on the vehicle that is provided.
Grey Fleet – is generally a situation where an employee uses their own car for company business and it reimbursed the cost of doing to by claiming for business mileage related expenses, normally via a mileage rate that is claimed.
Shades of grey – many employers provide their employees with schemes that are pseudo grey fleet where they offer differing levels of control. These include:
- Employee Car Ownership Schemes. Technically and from a tax perspective the employee owns the car but the employer manages the costs and most of the risk so it feels like a company car. Some would put this outside of the term grey fleet, others would not. That’s why it’s called grey fleet.
- Cash Allowances – an employer gives an employee cash to make a purchase /lease of a vehicle. Many will also have arrangements with leasing companies where discounts are offered. The employee still owns the car but a lower mileage rate is often paid to offset the tax that is paid
So as you can see the difference between a company car and grey fleet is normally who owns the vehicle, but with so many variances in this it’s clear to see why it’s called grey fleet.