Marvin OnumonuNearly half of employers offering car allowances do not know how the money is spent, research from Tusker found.
The report showed 46% of businesses had no oversight, raising concerns over cost control, emissions reporting and duty of care.
Another 30% said only a few employees actually used the allowance to fund a car.
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.”
More employers are now moving to structured car schemes instead of ad-hoc allowances. Salary sacrifice schemes, especially for electric vehicles, offer fixed costs, tax and national insurance savings, and more control.
Research found 38% of employers saw national insurance savings as a main reason to use these schemes, and 47% put those savings back into their business or benefits.
Clements added: “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.”
Leeds Community Healthcare NHS Trust introduced a subsidised salary sacrifice car scheme in November 2024 to cut £1.5m in annual mileage costs and reduce grey fleet use.
The Trust partnered with Tusker and CPC Drive to give staff a more sustainable and inclusive transport benefit.
The scheme includes a £113 monthly employer subsidy, helping NHS Band 4 staff on £26,530 access a maintained and insured car for the first time.
Over 1,000 staff were eligible at launch, with high initial interest.
The scheme improved access to green vehicles and backed the Trust’s sustainability targets by lowering emissions from business travel.
Harriet Jones, sustainability and environmental manager at Leeds Community Health NHS, said: “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.
“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.”
Jones added: “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.”
