Company Car Benefit Tax Calculator Kenya
How much taxable benefit does a company car add?
What the employer paid, including VAT and duty. Use the purchase price even if the car is old or was bought second-hand.
Private use and part months
Pool or work-only vehicles carry no benefit. Keep a logbook to show KRA.
Only KRA can set a lower rate, after the employee proves limited private use.
Pro-rating by days is common practice, not a rule in the Act.
Extra PAYE for the employee
Allowances, overtime, bonus.
Car benefit
per month · ITA s.5(2B)Add the employee's salary to see the extra PAYE the car adds.
How it's worked out
- Hired or leased car: the taxable benefit is what the employer pays for the hire or lease each month.
- Car owned by the employer: work out 2% of the car's initial cost, including VAT and duty. Depreciation doesn't reduce it.
- Look up KRA's fixed monthly rate for the vehicle type and engine size (table below).
- The benefit is the higher of the two. If KRA has approved a lower value for restricted private use, that value applies instead.
- Part months: if the car was available for only some days, the benefit is often pro-rated by days. This is practice, not a rule in the Act.
- Add the benefit to taxable pay and run PAYE. The extra PAYE is the difference between PAYE with and without the car. NSSF, SHIF and housing levy are charged on cash pay only.
KRA fixed monthly car benefit rates
| Vehicle type | Engine size | KES per month |
|---|---|---|
| Saloon, hatchback, estate (including Range Rover type) | Up to 1200cc | 3,600 |
| 1201–1500cc | 4,200 | |
| 1501–1750cc | 5,800 | |
| 1751–2000cc | 7,200 | |
| 2001–3000cc | 8,600 | |
| Over 3000cc | 14,400 | |
| Pick-up or panel van (not converted) | Up to 1750cc | 3,600 |
| Over 1750cc | 4,200 | |
| Land Rover or Land Cruiser | Any engine size | 7,200 |
Questions people ask
How is the car benefit calculated in Kenya?
For a car the employer owns, the monthly taxable benefit is the higher of 2% of the car's initial cost and KRA's fixed monthly rate for the vehicle type and engine size (ITA s.5(2B)). For a hired or leased car it is the hire or lease cost.
What are KRA's prescribed car benefit rates?
Saloons, hatchbacks and estates: KES 3,600 (up to 1200cc) to KES 14,400 (over 3000cc) a month. Pick-ups and unconverted panel vans: KES 3,600 or 4,200. Land Rovers and Cruisers: KES 7,200. For most cars the 2% rule gives the higher value.
Can the benefit be reduced if I rarely use the car privately?
Yes, but only if KRA agrees. Under s.5(2B), the Commissioner can set a lower rate when the employee proves restricted use.
Is fuel or a driver included?
No. Fuel for private use and a chauffeur are separate non-cash benefits valued at cost, and are taxable once non-cash benefits reach KES 5,000 a month.
Sources
Rates last checked 13 Sep 2026. Estimates only, not tax or legal advice.