New Channel is using the advantage of a tax break to sell extended warranties on a variety of brown, white and computer goods through a new website, called

Managing director David Milner said by selling warranties through the net and not at point of purchase meant that the rate of insurance premium tax was cut from 17.5% to 5%.

He said it meant the company can undercut the high street by up to 56%.

“Let's take the example of a camcorder worth between £501 to £1000; on a five-year extended warranty for this item costs £110 but some high street retailers are charging up to £249,” he said.

“Even after removing the costs of the different taxes, the net high street price in this example is still twice our net price, showing the financial advantages of buying separate cover.”