An interesting story is what’s happening with the cafeteria system right now. Many people now pay for their home loans from their cafeteria facility, which was a tax-free benefit.
It is a good initiative, so many people have started. In fact, many have planned to do so. Well, they have bad news. Let’s see how the system changes and what this means for prospective borrowers!
Repayment of a loan from Cafeteria
Many people were very happy, especially last year, when they had the opportunity to cancel their mortgage they had taken out or started last year from their fringe benefit, the cafeteria. It was worth it for employees because there was a 0% tax rate for companies on this service.
That is, they could spend more on the given cafeteria envelope than if they had chosen another cafeteria item (for example, 40.71% or 34.22% would have been the tax burden) . Not to mention that it would be more favorable than this amount to receive the money as a gross wage, as we know well the difference between net and gross wages. Up to HUF 83,000 in one month, our company could “take over” the loan from our loan repayment .
What will be the change?
We can state from the outset that change will not be good for us. As employers will be taxing wages after 2019 on a loan repayment, it is likely that fewer or almost no one will give this opportunity to their employees.
They won’t take on the tax burden, it’s easier to give it as a wage. Let’s count a bit and see what that means on a monthly basis!
Lots of downtime
According to one expert, the average cafeteria budget is around 390,000 HUF . An employee is worse off at this amount if he gets his money as a wage. On a monthly basis it is HUF 14,585.
Interestingly, after using the loan calculator, we can see that over a 20-year period, this means about $ 3 million.
For those employees where the company provided the highest possible support through the cafeteria, which is 83 thousand HUF a month, the decline is even more dramatic. Here the difference between the salary and the tax-free allowance is HUF 37,500 per month. In the same way as in the example calculated above, this corresponds to a loan of about HUF 7 million over a 20-year period.
This is already a huge difference, so it is important that we do not plan for this opportunity next year, or whoever is preparing for this year’s paid future is going to pass this time. They were already over 40,000 in 2016.
The first solution, however difficult it may seem, is to reorganize our revenues and expenses a bit and, if we are concerned, the difference has to be managed elsewhere.
The other solution, if we have older credit, is to replace it with cheaper. Previously, we have written about how much monthly amounts and how much money we can save, as interest rates are still low.