Grey Fleet Costs and Risks: What Employers Pay at 55p a Mile

A grey fleet is staff using their own vehicles for work. At HMRC’s approved rates of 55p for the first 10,000 business miles and 25p after, one driver doing 20,000 miles costs £8,000. The same miles in a diesel van at 36 mpg use about £5,040 of fuel at 199.22p a litre.

What is a grey fleet?

HSE defines it simply: “A grey fleet vehicle is owned and driven by a worker for business purposes.” The vehicle belongs to the employee, but the journey is yours.

Grey fleet miles are paid through the approved mileage rates in HMRC’s business travel mileage rules: 55p a mile for the first 10,000 business miles from 6 April 2026 (45p before), then 25p. Motorcycles are 24p and bicycles 20p.

What does a grey fleet cost at 55p and 25p?

It costs 55p a mile until a driver reaches 10,000 business miles in the tax year, then 25p, so the average falls as mileage rises. From 6 April 2027 the rate above 10,000 miles goes up to 35p (Budget 2026 overview, measure 2.7), which makes high-mileage grey fleet drivers dearer. This table shows the cost at the approved rates, and the fuel cost of the same miles in a diesel van doing 36 mpg at the DESNZ price for the week of 26 October 2026 (199.22p a litre, 25.2p a mile).

Business miles a year	Grey fleet at approved rates	Average per mile	Diesel van fuel only	Headroom
5,000	£2,750	55p	£1,260	£1,490
10,000	£5,500	55p	£2,520	£2,980
15,000	£6,750	45p	£3,780	£2,970
20,000	£8,000	40p	£5,040	£2,960
30,000	£10,500	35p	£7,560	£2,940

The “headroom” column is the grey fleet cost minus the van’s fuel. It is the most the van’s other annual costs can be before the grey fleet becomes the cheaper option on these figures. The calculation covers only what employers pay for the miles: it assumes you pay the full approved rate, which HMRC does not require.

When do company vans cost less than a grey fleet?

They cost less when the van’s lease or finance, insurance, tax, servicing and tyres come to less than the headroom, roughly £3,000 a year at 10,000 miles or more. We have not included those costs, because they depend on the vehicle and your contracts. Use your own quotes.

The table shows a pattern. Above 10,000 miles the grey fleet rate falls to 25p, which is about the same as the van’s fuel alone (25.2p). So each extra mile beyond 10,000 costs about the same in either setup before the van’s other costs, and the headroom stays near £3,000 whether the driver does 15,000 or 30,000 miles. Most of the difference is made in the first 10,000 miles, at 55p.

That points to who to move first. A driver doing 4,000 miles a year is unlikely to justify a van. A driver doing 15,000 to 30,000 miles is where you should price one.

Your own figures, from the fleet cost index and the mileage rates tool, will tell you where your drivers fall.

What risks does an employer carry with a grey fleet?

The legal risk is the same as for a company vehicle. HSE says “The law applies to both company and grey fleet vehicles”, and that as an employer you “must manage health and safety risks to workers who drive a vehicle or ride a motorcycle”. Its employer guidance on driving and riding for work says you must carry out a risk assessment, and that the main areas are “the journey, the driver or rider and the vehicle”.

In practice that means you need to know about three things for each person who drives their own vehicle for work:

• The journey: how many miles, what roads, what hours.
• The driver: their licence, and their habits at the wheel.
• The vehicle: whether it is safe and fit for the work.

With your own vehicles you can see and control these. With a grey fleet you rely on what the employee tells you. A car you do not own is not yours to fit equipment to, so a speed limiter or tracker on a company van is a control you do not usually have on an employee’s private car.

How do you cut grey fleet costs without losing flexibility?

Start with data. Pull 12 months of mileage claims and sort drivers by annual business miles. The ones above 10,000 are your candidates, and the pattern of their trips shows whether a van, a pool vehicle or a lease would fit. Mileage allowance 55p, what employers need to know shows how the rate change affects each mileage band, and advisory fuel rates vs mileage allowance explains why a company vehicle is reimbursed differently.

Frequently Asked Questions

What is a grey fleet?

A grey fleet is made up of vehicles owned by employees and used for business journeys. HSE describes it as a vehicle “owned and driven by a worker for business purposes”.

How much does a grey fleet cost?

At HMRC’s approved rates it costs 55p for each of the first 10,000 business miles in a tax year and 25p after that. A driver doing 12,000 miles costs £6,000 and a driver doing 20,000 miles costs £8,000, if you pay the full approved rate.

Is the employer responsible for grey fleet drivers?

Yes, for health and safety. HSE says the law applies to both company and grey fleet vehicles and that employers must manage the risks to workers who drive for work. HSE expects a risk assessment covering the journey, the driver and the vehicle.

Is a company van cheaper than a grey fleet?

For high-mileage drivers it can be. At 36 mpg and 199.22p a litre, a van’s fuel costs 25.2p a mile, against 55p for the first 10,000 grey fleet miles. The van’s lease or finance, insurance, tax and servicing then need to come to less than about £3,000 a year, on these figures, for the van to win.

Do I have to pay the full 55p?

HMRC’s approved rate is the amount you can pay without tax or reporting consequences. If you pay less, the employee can claim relief on the balance. If you pay more, the excess is taxable and reported on a P11D.

Cut your fleet’s fuel bill

Put your drivers’ annual business miles through the mileage rates tool to get your grey fleet cost, then use the fleet cost index to compare it with running those miles in your own vehicles.

If you move miles onto company vans, a speed cap controls the fuel they burn. The Department for Transport’s fuel consumption curves (TAG data book v2.03, May 2026, published on GOV.UK) show a diesel van using 14.9% less fuel per mile at 56 mph than at 65 mph. The saving across a fleet depends on the share of miles driven above the cap.

AutoKontrol has made speed limiters in Britain since 1985 and installs them nationwide: we come to you. Book a free consultation or get a quote. If you want speed control and tracking from one installation, ask about TrackSpeed, which combines a speed limiter and GPS tracking in one device with one subscription.