Exposing grey fleet risks – nearly half of employers don’t know how car allowances are spent

Forty-six percent of employers offering car allowances don’t know how the money is being spent, according to the ‘Driving Loyalty Through Electric Cars’ report from salary sacrifice car scheme provider Tusker. This research raises major concerns around cost control, emissions reporting and duty of care, as a further 30% admit only a small number of employees actually use the allowance to fund a car.

This growing reliance on the so-called “grey fleet” – where employees use their own vehicles for business travel – leaves organisations exposed. Without visibility, they cannot guarantee vehicles are roadworthy, properly insured or aligned with environmental goals. It also obscures accurate tracking of Scope 3 emissions – now a critical component of corporate sustainability strategies.

Cheryl Clements, Head of Business Development at Tusker, said: “When employees drive for work, whether in a company vehicle or their own, employers have a clear legal duty to manage that risk. Too often, basics like insurance, licence checks, and vehicle condition fall through the cracks. Taking a more structured approach helps organisations stay compliant, protect their people and make smarter decisions about how business travel is managed.”

As a result, more employers are now turning to structured car schemes to replace ad-hoc allowances. Salary sacrifice schemes, particularly for electric vehicles, offer fixed monthly costs, tax and National Insurance efficiencies, and greater control. In fact, 38% of employers say NI savings are a key driver for adopting such schemes, and 47% reinvest those savings back into their organisation or benefits packages.

“As grey fleet costs rise and pressure grows to meet climate targets, employers need better tools to manage business travel. Salary sacrifice provides that structure. It’s transparent, predictable and genuinely benefits both employer and employee,” added Clements.

One organisation taking action is Leeds Community Healthcare NHS Trust, which launched a subsidised salary sacrifice car scheme in November 2024 to cut £1.5 million in annual mileage reimbursement costs and reduce grey fleet reliance. The Trust partnered with Tusker and CPC Drive to create a more sustainable and inclusive transport benefit for staff.

The scheme introduced a £113 monthly employer subsidy, enabling lower-paid NHS Band 4 staff on £26,530 to access a fully maintained and insured car for the first time. Over 1,000 employees were eligible at launch, with significant early interest. The scheme not only improved employee financial wellbeing and access to green vehicles, but also supported the Trust’s sustainability goals by reducing business travel emissions.

Harriet Jones, Sustainability and Environmental Manager at Leeds Community Health NHS commented, “We know that there are a lot of NHS workers who need a car, not least those working in the community or living in rural areas. The salary sacrifice scheme we have in place with the subsidy included, offers a chance for employees to access a car who previously, would not have been able to, particularly those in lower pay brackets.”

She continues, “The scheme also provides flexibility and considerable tax savings for individuals as a salary sacrifice car includes insurance, maintenance and lifestyle protections which many personal leasing options don’t. It also means that we have total peace of mind that our duty of care is covered, so if the worst should happen, our employees and the Trust are protected.”