I have lots of mileage claims but don’t provide company cars. Should I?
Many businesses rely on employees using their own vehicles for work and reimbursing them for mileage. But when claims are frequent or cover high distances, this can create:
- Rising costs
- Admin headaches
- Poor visibility over fleet activity
- Employee dissatisfaction with reimbursement levels
So, what are your options if you want to maintain flexibility without going fully down the company car route?
Alternative Solutions to Consider
1. Cash Allowances
Pay employees a fixed monthly amount instead of a car. It’s simple but be aware that:
- It may affect tax and National Insurance
- Doesn’t guarantee the employee drives a suitable vehicle
- Harder to control emissions or safety compliance
2. ECO Schemes (Employee Car Ownership)
These provide tax-efficient, structured alternatives to traditional company cars. You can offer cars to high-mileage drivers while keeping costs down for both the business and the employee. These have fallen out of favour due to UK Government tax changes and appetite.
3. Grey Fleet Management
If you’re reimbursing private vehicle use, you must manage driver safety, MOT, insurance, and compliance. A comprehensive grey fleet policy is essential.
4. Salary Sacrifice Electric Vehicle (EV) Leasing
For employees who want an electric car, salary sacrifice allows tax-efficient access to a brand new vehicle often with less cost to the business than mileage claims, a huge surge in popularity of schemes over the last 5 years and a good long term option given expected BIK tax movements to 2029.
Our Recommendation
If your team is clocking up the miles and you don’t provide company cars, it may be time to review your approach. The right mix of policy, tools, and incentives could:
- Cut costs
- Reduce admin
- Improve duty of care
- Boost employee satisfaction
LetsTalk Fleet can help you explore smart, tax-efficient mobility options that suit your business goals and workforce needs.