Benefits-in-Kind
Understanding how non-cash employment benefits are taxed in Kenya.
Official Definition (KRA):
Benefits-in-kind are non-cash benefits provided by an employer to an employee that have a monetary value and are subject to tax. These benefits are added to the employee's gross salary for PAYE calculation.
Common Taxable Benefits
Company Car
If your employer provides a car for personal use, the benefit is calculated as:
Housing Allowance
If your employer pays for or provides housing, the taxable benefit is:
- Actual rent paid by employer, OR
- 15% of your basic salary (whichever is lower)
Medical Insurance
Premiums paid by employer for medical insurance covering you and your family are taxable benefits, unless it's a group scheme.
School Fees
School fees paid by your employer for your children are taxable benefits.
Loans at Low/No Interest
If your employer gives you a loan at below-market interest rates, the benefit is:
Market interest rate minus actual interest rate, applied to the loan amount.
Non-Taxable Benefits
Exempt Benefits
- • Medical insurance for group schemes
- • Retirement benefits contributions
- • NSSF contributions
- • Training and development courses
- • Work-related tools and equipment
- • Meals in staff canteen (reasonable value)
How It's Calculated
Worked Example:
Your monthly salary: KES 100,000
Company car benefit: KES 40,000
Housing allowance: KES 20,000
PAYE will be calculated on KES 160,000, not just KES 100,000.
Important Notes
- • Your employer should include benefits-in-kind in your P9 certificate
- • Always check your payslip to see if benefits are included
- • If benefits aren't included, you must declare them in your annual return
- • Keep records of all benefits received
- • Consult your HR or a tax professional if unsure