Advantages and points of interest of lease cars in a cafeteria plan
The cafeteria plan gives employees the choice to personalize and optimize their pay package with fringe benefits that they choose themselves. In a previous blog we discussed what such a plan entails, why it strengthens you in the 'war for talent' and the best steps to take to set this up. We will go into this in more detail and discuss the benefits of lease cars within a cafeteria plan, the changes in car taxation and some points of interest.
Win-win for employee and employer
A lease car in the cafeteria plan is a win-win for the employer and the employee. More than ever, companies are looking for ways to optimize their compensation package without increasing costs. By offering a lease car, wage expenditure remains stable and employees receive something valuable in return.
In addition, a lease car is an asset for attracting new talent. Due to the scarcity on the labor market, applicants usually have high expectations. Especially if they have a company car with their current employer, they are not inclined to opt for a new job without a vehicle. Lease cars are also excellent for the retention rate. The greater the satisfaction and better the benefits, the less likely employees are to succumb to other offers.
For employees, a lease car is a great optimization of the salary package. Within the cafeteria plan, they can hand in a portion of their gross salary in exchange for a lease car. This offers numerous advantages: your own vehicle can be more expensive than a lease car, if only because all additional costs for a lease car are often automatically included in the lease price. This provides extra comfort and does not entail unexpected expenses. In addition, the employees always drive a recent vehicle equipped with the latest gadgets: a lease contract runs for an average of 4 years. As soon as someone drives a lease car, they never want to go back to their own vehicle.
A sustainable image thanks to a green fleet
An other advantage of leasing: lease cars are the fastest way to an emission-free fleet. Especially now that sustainability forms the basis of almost every business strategy and vision, companies are switching to a green fleet. This is not only positive for the image of the organization, but can also be a decisive factor in attracting young talent.
It is also important from a fiscal point of view to choose electric vehicles in a cafeteria plan. Currently, zero-emission vehicles are still 100% tax deductible, while the tax benefits for petrol and diesel vehicles will be systematically phased out from the summer of 2023 to 2026. For employees, the tax aspect mainly has an impact on the taxable Benefit in Kind (VAA). The calculation of this depends, among other things, on the CO2 emissions of the vehicle: the greener the vehicle, the lower the Benefit in Kind.
Of course, an electric vehicle is slightly more expensive to purchase, but that does not have to be an obstacle if you decide to lease vehicles. There is no need for a large starting budget, especially if you offer the vehicle in your employees' salary package via a cafeteria plan.
Drawing up clear policies is essential
It is essential to draw up a clear car policy when introducing lease cars into the cafeteria plan. This policy must include all information for employees who include a lease car in their salary package. It describes the rights and obligations regarding the use of the lease car.
Furthermore, it is crucial to properly inform employees about the choice of a lease car within the cafeteria plan. They must clearly understand how the system works, what its benefits and limitations are, and what steps are required to choose a lease car. Extensive communication helps with a smooth transition and prevents any misunderstandings.
It is important to know that all aspects of a cafeteria plan for lease cars differ per company and depend on agreements between employer and employee.
