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Aviva offers company insurance for salary sacrifice car schemes

8th December 2010 Print

Aviva is launching a bespoke insurance policy for businesses which operate an employee salary sacrifice car scheme.

The UK's largest insurer has developed the offering, modelled on its Fleetwise commercial insurance product for corporate fleets, in response to the growing popularity of companies rewarding staff with tax efficient employee benefits.

Aviva can now provide a block insurance package to companies operating the scheme, with no limit on the number of vehicles covered by the policy. The product has been developed following feedback from all those involved in the supply chain, including leasing companies, brokers and businesses themselves.

Mark Keavney, development manager - Commercial Product Development at Aviva, said: "The salary sacrifice scheme allows employers to offer tax benefits to staff when the employee leases a new vehicle over a number of years.

"In the current economic climate, employers are looking for new ways to reward staff, and flexible benefits such as dental care, nursery vouchers and salary sacrifice vehicle schemes offer ways to retain staff without raising business overheads.

"Aviva has conducted extensive research to understand the requirements of businesses for a successful salary sacrifice car scheme to be implemented. We have developed a dedicated insurance product we believe is unlike any on the market. Although flexible for any size or type of business, the scheme is likely to be most attractive for companies with large fleets, whether FTSE-listed, privately-owned or local authorities."

In a salary sacrifice car scheme, the employer receives the vehicle from the leasing company, but only pays net of tax rather than full price. This saving is passed on to the employee, who receives a brand new car at a better price than if they went independently to the leasing company.

Keavney continued: "Payment is taken directly from the employee's salary, and is usually contracted over two or three years. The employee saves on national insurance and income tax up to the value of the scheme.

"Servicing, maintenance and insurance are all included, and if an employee chooses a car with low CO2 emissions, the vehicle normally provides minimal BIK tax, enabling further tax savings."