Arval BNP Paribas Group - Full Service Vehicle Leasing
For the many journeys in life

FREQUENTLY ASKED QUESTIONS

About salary sacrifice

About salary sacrifice
This is an employer provided scheme where you can agree to give up part of your cash pay or salary in exchange for services or goods.
These are well established with “Bike to Work” and pension schemes. The difference with this is that in exchange for part of your salary, your employer will agree to provide you with an insured company vehicle that is also maintained and on which road tax is paid.

You will no longer pay tax or National Insurance (NI) on the salary that you sacrifice. You will however pay tax on the company car that you receive in return, but depending on the car that you choose, you can minimise this cost. You will not pay any NI costs on the car.

This salary sacrifice product is provided as part of your flexible benefits scheme.
Is salary sacrifice right for me?
In order to benefit from the tax savings, HMRC requires that the salary sacrifice is a change to your terms and conditions, reducing your contractual salary, rather than something employees can simply opt in and out of. For this reason, employees are required to enter the Scheme on a longer term basis. Entering into any long-term financial commitment should be considered thoroughly. Procuring a new car via salary sacrifice is no different.

You should satisfy yourself that a company car will meet your lifestyle needs throughout the duration of the contract and that you understand the associated obligations.
How many cars am I allowed under the Scheme?
Please check with your employer or contact Arval team for details of how many cars you are allowed. However, please note that you will be required to agree to a reduction in salary equivalent to the total cost for all vehicles and you will be personally liable for tax on the vehicle
Are there any circumstances where it may not be advantageous to participate?
By participating in the Scheme, there will be a reduction in your basic salary and the amount of National Insurance contributions and income tax you pay. This could affect the level of certain State benefits you may be eligible to receive, for example statutory maternity/paternity pay, state pension, statutory sick pay, tax credits and other benefits.
For further information on State benefits, please see the Department for Work and Pensions website at www.gov.uk/government/organisations/department-for-work-pensions and HM Revenue and Customs (HMRC) website at www.hmrc.gov.uk.

It may not be advantageous for you to participate if:
  • Your earnings are close to the Lower Earnings Limit (LEL) of currently £6,240 per annum; or
  • Your earnings are close to the National Minimum Wage as, if after taking account of salary sacrificed under all the schemes in which you participate your salary would fall below the National Minimum Wage, you will not be able to participate in the Scheme; or
  • You expect that your own circumstances might change, including long periods of absence from work or if you think you may leave employment during the life of the agreement.
If you think you might fall into any of these categories, please refer to the following detailed questions which will help you determine the impact of your salary falling below either of these thresholds. If, having considered this information, you need further advice or guidance, please contact HR/Payroll.

You should also note that your employer will sign off every order before it is placed and regularly monitors salary levels to ensure that its legal obligations are met. If HR/Payroll considers that your salary could fall below either of these thresholds, they will help you to review your personal circumstances.

If your application to enter into the Scheme is accepted by your employer, this does not in any way affect your employer’s rights to terminate your employment in the normal way.

Taxation

What is Benefit in Kind (BIK)?
The provision of the car is a BIK on which you will pay income tax. The amount of tax is based on the manufacturer’s list price for the car, plus any non-standard accessories, multiplied by a percentage derived from the carbon dioxide (CO2) emissions of the car. Tax is due on this value at your appropriate income tax rate. For full details please refer to HMRC. For precise tax costs on your chosen vehicle, please refer to your individual vehicle quotation. Your vehicle quotation will make this calculation based on tax / salary assumptions and display these values for the period of hire. If we take an example petrol vehicle with a £16,000 list price or P11D value and a CO2 emission of 82 g/ km, which equates to 20% for the 2021/2022 tax year, we can work out the BIK. The CO2 based BIK value is £16,000 x 20%= £3,200.

Since April 2017, if the vehicle has a CO2 of 76g/km or more, then this value must be compared to the annual salary sacrifice (for the finance elements of the rental for 2021/2022 tax year and total amount sacrificed for future periods) and income tax will be charged on the higher value. This is all detailed on your personal quote output.
BIK values can change annually (as can be seen by the % changes in this table) due to changes in the HMRC rules. Be aware that this will impact your ‘take home’ salary over the course of the agreement.

If you choose a vehicle with an ultra low CO2 emission (75g/ km CO2 or less), the tax due on the BIK could be substantially less than the income tax and NICs saved on the salary sacrificed.

Your precise savings will depend upon your personal tax circumstances and the car you choose.

The relevant figures, including the net salary sacrifice (total cost to you), will be shown in your quotation when you choose your car. The quotation shows you the different values for the life of the agreement.
How will my payslip change?
When your car is delivered, your employer will amend your salary to allow for the salary sacrifice and shortly after this, HMRC will notify your employer of your new PAYE code.
This will affect your payslip in several ways. Firstly, the Gross Salary Exchange value will appear on your payslip. In addition, your tax and NI values will change, as will your tax code.
How do HMRC know that I have a car?
As soon as you have taken delivery of your salary sacrifice vehicle, you should notify HMRC directly. Your employer will notify them on an annual basis, but it is better to have the tax taken as quickly as possible, rather than pay back a number of missed months. To do this, you can call them on 0300 200 3300. HMRC will amend your PAYE notice of coding or tax code to account for your new car, so that the income tax can be collected directly from your salary using Pay as You Earn (PAYE).

This process may take several weeks, so during this time, although your gross salary will be reduced, the income tax due on the BIK may not be collected by HMRC. As soon as your revised tax code is confirmed by HMRC, then the income tax due on the company car can be collected.

Monthly Payments

How much will my salary be impacted?
The advantage of salary sacrifice is that you no longer pay income tax or National Insurance Contributions (NICs) on the amount of salary sacrificed. How much you save will depend on your personal income. The amount of income tax and NIC that you pay will fall, due to your lower salary.

Typically, a person on a salary of £30,000 will be able to save 20% income tax and 12% NI (32%) on the salary sacrificed. A person with an income of £55,000 would normally save 40% income tax and 2% NI (42%) on the salary sacrificed. However, based on your individual circumstances, incomes and benefit selection, you need to understand what income tax bracket and NI bracket you are actually in, as they could vary from the examples quoted above.

However, the car that your employer provides you with is classed as a company car and therefore you will be subject to income tax on the value of the benefit. By choosing a car with an ultra low carbon dioxide (CO2) emission (75g CO2/km or below), the BIK on the car can be minimised, and still enable you to benefit from the tax and NI savings.
If my salary is reduced, how will I be able to check that other payments have been worked out correctly and paid to me?
Your payslips will look slightly different, as your reference salary (your salary prior to the salary sacrifice) will be shown on your payslip together with the salary reduction relating to the Scheme.

Payment of bonuses, commissions, overtime etc. will continue to be based upon your reference salary. You will be able to check these payments using the reference salary quoted on your payslip. Please see the FAQ entitled ‘How will my payslip change?’ under "Taxation" for further information.
Will participation in the Scheme have any impact on my payments to the Child Support Agency (CSA)?
Child maintenance payments are calculated by reference to your net income (excluding BIK), that is your pay after the deduction of regular pension contributions, tax and NICs.

Under the Scheme, even though you will generate savings, your net income for child maintenance purposes will actually decrease. Your child maintenance payments may therefore be reduced as a result.

If you decide to participate in the Scheme, you should notify the CSA of the change in your net income. Contact details for the CSA and further details can be obtained from the CSA’s website at www.gov.uk/child-maintenance.
Will my student loan repayments be affected?
Loan repayments to the Student Loan Company are calculated by reference to gross earnings that are subject to Class 1 NIC. Hence BIK, such as a company car, are excluded when determining whether your earnings exceed the annual threshold.

If you are repaying a student loan taken out with the Student Loans Company, your repayments may reduce as a result of participating in the Scheme.
What if I need a reference for a mortgage or a loan?
Many lenders are familiar with the concept of salary sacrifice and run similar schemes for their own employees. When responding to any lender’s request for a reference, your employer will confirm the amount of your reference salary, that is your salary before the application of the salary sacrifice.
Will my pensionable salary remain the same?
Please refer to your HR Team for details on your benefits scheme.
If I participate, will it affect any other payments made by the Company?
Your employer has agreed that your participation in the Scheme should not affect your other salary-related earnings. Therefore, all future pay rises and all salary related pay and benefits, including bonuses, commissions, overtime or shift premium, will continue to be based on your reference / basic salary (prior to the salary sacrifice). However, as discussed below, certain statutory payments may be affected.
How will I be recompensed if I use my salary sacrifice car on business?
Your employer will reimburse you for fuel used on business trips. Please see your Arval Ignition Company Car Policy for more details.
What happens if my salary falls below the Lower Earnings Limit?
If your salary falls below the LEL, your entitlement to certain state benefits may be adversely affected. If your earnings are likely to fall below the LEL, you should carefully consider your position before you participate in the Scheme.
Can I keep my car during maternity or paternity leave?
You will be required to continue to make payments for your car. If you have insufficient salary to make these payments, you will need to make alternative arrangements with your employer.
Is the monthly cost fixed for the contract term?
Yes, your monthly rental will only change if we mutually agree a change. For example, if there is a change in overnight postcode, an increase in your contracted mileage, or the vehicle is involved in two or more at fault incidents in a 12-month period. In this case, we’ll discuss your options with you.

Maintenance

Am I entitled to a replacement vehicle when mine is off the road due to an incident?
You’re entitled to a courtesy car for the duration of the vehicle repair, subject to the repairer’s conditions. You’ll also need to make sure that the courtesy car is insured by the repairer. Please note that this will not be a like-for-like replacement of your existing lease vehicle.

If you’re involved in an incident where the third party has been identified and proved at fault, you may be provided with a vehicle similar to your current lease through our non-fault hire provider, Auxillis, subject to acceptance. If your vehicle is stolen and not recovered, you will not be provided with a replacement vehicle.
What is included in the maintenance cover?
We cover the costs of all routine work that will occur during the contract term based on manufacturer guidelines. This includes servicing, maintenance, repairs, premium tyres*, batteries, breakdown cover, exhaust and any worn items.

If you need any servicing work or tyres, please contact our Arval Contact Centre on 0370 600 4499 (Mon-Fri 9am-5:15pm) and we’ll be able to help put you in touch with a local supplier.

If your vehicle is stolen and not recovered, you will not be provided with a replacement vehicle.

*We have a Fair Play policy on tyres. This means that damaged tyres will be replaced inside the maintenance budget. Replacements in the event of abuse, neglect, theft or vandalism will be recharged. Our maintenance scheme does not cover driver abuse, damage or replacement as a result of neglect. These charges will be billed via a vehicle services invoice.
What should I do if my vehicle breaks down?
Please call our designated helpline on 0370 600 4499, where our team will assist you with your vehicle and send a recovery van where necessary.
Am I entitled to a replacement vehicle when mine is off the road due to mechanical failure maintenance work?
If the repairer has a courtesy car available, then you can utilise this whilst your vehicle is being repaired, subject to their conditions.
Please note that insurance should be arranged through the repairer.

Arval Total Care

Who is allowed to drive my vehicle?
Your spouse, partner or immediate family i.e. parents, siblings, children will be covered to drive the vehicle as long as they meet the additional driver criteria and have completed a licence check. The following driver eligibility criteria applies to the Arval Total Care product:
  • Driver must be aged 19-70
  • Must hold a full UK/EU driving licence, which has been valid for at least one year
  • Has no more than two own fault claims in the last two years
  • Have no more than six points on their driving licence record in the last five years
  • Has not been subject to a driving ban in the last five years
  • Has not been advised to stop driving by the Driver and Vehicle Licensing Agency (DVLA) or a medical practitioner due to a medical condition
  • Have never been refused insurance in the past.
Am I covered for business travel?
Yes, your Arval Total Care package covers you for both business and personal use of the vehicle. You aren’t restricted to the types of journey you make, subject to the trade usage criteria detailed in your contract.
Who provides cover for my vehicle?
AMERICAN INTERNATIONAL GROUP UK LIMITED (AIG) insure the vehicle for third-party liability cover. The insurance policy is in the name of Arval UK Ltd who hold this policy on your behalf. We provide cover for your own damage protection, which we’ll explain in a bit more detail below. We are responsible for repairing any damage to your vehicle as a result of an incident. You won’t be responsible for the costs, but you will need to pay the Customer Incident Charge (CIC) – we’ll cover this later on.
Please do keep in mind that own damage protection won’t protect you against damage caused or resulting from driver abuse or neglect. If any damage is caused by the fault of a third party, then we’ll recover the costs directly from them.
What is an incident?
An incident means an event or accident resulting in damage, loss or theft of the Arval Total Care vehicle, damage to third-party property, personal injury or death of a third party. An incident will be considered as fault if we are unable to recover the costs from the responsible third party. This includes theft, fire, vandalism and weather events.

Where it’s been established that you aren’t at fault, we’ll attempt to recover costs from the responsible party. This could involve legal proceedings where you may need to give evidence to support the claim in court.

If the losses aren’t recoverable due to any act or omission by you or your driver, then we reserve the right to invoice any losses to you.
What is a Customer Incident Charge (CIC)?
In the event of an incident where it is considered that you are ‘at fault’, you’ll need to pay the CIC. This includes any claim where we’re unable to recover costs from a third party. The CIC varies depending on the number of ‘at fault’ incidents for the vehicle.

We have an escalating CIC dependent on the number of incidents incurred during the contract term. This is designed to prevent price increases and maintain a fixed monthly rental for the duration of your contract. The CIC is a contribution to the losses incurred by us as a result of the incident. The CIC will not apply where we are able to recover costs from the responsible party.

Where we’re unable to recover costs from a responsible third party, a CIC will be charged. Please note that where the repair costs are less than the CIC, then we’ll only charge you the actual cost of the repair.
What happens if my vehicle is stolen?
Notify the police and then contact our Arval Contact Centre by calling 0370 600 4499. If the vehicle is recovered, please let us know immediately and we’ll arrange for any repairs to be made if needed. If the vehicle hasn’t been recovered after 21 days, then we will terminate your agreement in line with our total loss process and your monthly rental liability will cease for any future rentals. At this point, we will invoice the relevant CIC to you.

If there’s has been an act, omission or negligence by you or your driver which contributed to, or resulted in, the theft of the vehicle (e.g. if the keys are left in the car), then the termination costs will be borne by you. If the vehicle is recovered and sold or any monies are received later on, these will be credited back to you up to the value of the charge you received.
What happens if my vehicle is deemed a total loss as a result of an incident?
The lease will be terminated within 48 hours of our assessors confirming that the vehicle isn’t economical to repair. At this point, if you’re considered to be ‘at fault’, we’ll invoice the CIC directly to you. You will be responsible for the whole month’s rental at the point of termination.
What is glass protection?
We’re responsible for repairing and replacing body glass to your vehicle. You must report the damage to us and we’ll arrange for this to be repaired via our network. You will be responsible for paying a glass CIC fixed at £100 where it is necessary to replace the glass. No charge applies where the glass can be repaired.
What would happen in the event of misfuelling ?
Any costs incurred as a result of misfuelling, including AdBlue, are not covered by Arval Total Care and will be recharged to you.
Do I need a copy of the insurance certificate?
No, your vehicle is delivered with cover provided under our own insurance policy through the Arval Total Care product and is automatically registered on the Motor Insurance Database (MID). If you need a certificate, please get in touch with us as we can arrange this as an exception.
Where can I find my policy conditions for Arval Total Care?
These will be detailed within your terms and conditions agreement.
This information can also be found in the Arval Total Care acceptance criteria document.
Am I covered for any damage caused by driving through standing floodwater?
Arval Total Care does not cover any damage caused as a result of driving through standing flood water. Any associated costs will be recharged to you.
What should I do if the overnight address changes?
You’ll need to call us to declare a change of overnight postcode. Please contact our Account Management team to discuss this in more detail.
Can I add Arval Total Care to my existing Arval agreement ?
Yes, providing you meet the acceptance criteria, already have our guaranteed maintenance service and your existing agreement has a minimum of 12 months left. Please get in touch with our Account Management team who will be happy to talk to you about this in more detail.
Can you provide me with a ‘no claims letter’ at the end of my contract?
We can provide a driver history letter which will detail the number of years ‘claim free’ for the driver for the duration of the agreement. This will be available upon request. Please note that we cannot guarantee all insurance companies will accept the documentation we provide.
What are the rules around towing?
The driver will need to ensure they comply with the legal requirement around the weight they will be towing. Any damage to a trailer or caravan is not covered under Arval Total Care. However, you will be covered for any damage caused to a third party in accordance with UK legislation.

Travelling overseas

What do I do if I want to take my vehicle overseas?
Please get in touch with us on 0370 600 4499 (Mon-Fri 9am-5:15pm) at least 14 days in advance of travel and provide details of your travel destination and dates, as well as details of drivers and any additional drivers. We will provide you with a Vehicle on Hire certificate (VE103) to replace the registration document. This is a legal requirement. A standard fee of £15 plus VAT applies for this document. An insurance certificate, confirming that the vehicle is insured to be taken out of the country for the period of travel, will be provided to you.

If you already have a valid VE103 from a previous trip, you’ll still need to contact us to get a new insurance certificate. A Green card will also be provided if required for overseas travel.

If you’ve been delayed in your return and your insurance certificate is due to expire, you’ll need to contact us for permission to extend the cover and we’ll issue you with a new insurance certificate. It will be your responsibility to print this document and keep it in the vehicle.

Returning your vehicle early

What should I do if I want to return the vehicle early?
Should you wish to return the Salary Sacrifice vehicle before the end of the contract, please check with your HR team that you are able to exit the scheme and then get in touch with the Ignition Team, who will be happy to discuss the process and any financial implications with you. Please note that you’ll be liable to make a payment in accordance with the scheme.