Low-Interest Staff Loan Benefit Calculator
What tax is due on a cheap staff loan?
What the employee still owes at the start of the month.
Enter 0 for an interest-free loan.
Rate, loan date and borrower
For example, once KRA publishes a new quarter's rate.
Only matters for loans made on or before 11 June 1998. Leave blank for newer loans.
Latest published: Jul–Sep 2026 (KRA public notice 2379 (14 Jul 2026)). Checked 13 Sep 2026.
Fringe benefit tax
Oct 2026 · ITA s.12B- FBT rate
- 30%
- Employee's payslip
- No change
- Due
- 10th of next month
FBT continues after the employee leaves for as long as the loan is unpaid, and is due even if the employer is making losses. Loans from an unregistered pension or provident fund are included.
How it's worked out
- Find KRA's market interest rate for the month. It is set each quarter from the average 91-day Treasury bill rate of the previous quarter.
- Interest at the market rate: loan balance × market rate ÷ 12.
- Interest the employee pays: loan balance × the loan's interest rate ÷ 12.
- Taxable value is the difference, or zero if the employee pays the market rate or more.
- FBT is 30% of the taxable value, paid by the employer on or before the 10th of the next month with the PAYE return. The employee's payslip doesn't change.
- Loans made on or before 11 June 1998 and never changed are outside FBT. Instead, the employee is taxed on a low-interest benefit at KRA's prescribed rate.
KRA market interest rate for FBT
Latest published: 8% for Jul–Sep 2026. Checked 13 Sep 2026. Later quarters use this rate until KRA publishes a new one.
| Quarter | Market rate | Source |
|---|---|---|
| Jul–Sep 2026 | 8% | KRA public notice 2379 (14 Jul 2026) |
| Apr–Jun 2026 | 8% | Regfollower |
| Jan–Mar 2026 | 8% | KRA public notice 2337 |
| Oct–Dec 2025 | 8% | KRA public notice 2311 |
| Jul–Sep 2025 | 8% | KRA public notice 2231 |
| Apr–Jun 2025 | 9% | KRA public notice 2171 |
| Jan–Mar 2025 | 13% | Eastleigh Voice |
Low-interest benefit rate (pre-1998 loans)
| Period | Prescribed rate |
|---|---|
| Jul–Dec 2026 | 8% |
| Jan–Jun 2026 | 8% |
| Jul–Dec 2025 | 9% |
| Jan–Jun 2025 | 14% |
Questions people ask
Who pays tax on a low-interest staff loan in Kenya?
The employer. Under ITA s.12B, the employer pays fringe benefit tax at the corporate rate (30%) on the difference between interest at KRA's market rate and the interest the employee actually pays. It is not deducted from the employee's salary.
What is KRA's market interest rate for 2026?
KRA set it at 8% for January–March, April–June and July–September 2026. It is published quarterly and based on the average 91-day Treasury bill rate of the previous quarter.
When is FBT due?
Monthly, on the total taxable value of all staff loans for the month. The Act says it is due on or before the 10th of the following month, and employers declare it with the monthly PAYE return.
Does FBT stop when the employee resigns?
No. It continues for as long as the loan remains unpaid, even after employment ends.
Sources
- Kenya Law — Income Tax Act s.12B and s.5(2A)
- KRA public notice 2379 — market rate Jul–Sep 2026
- Regfollower — market rate Apr–Jun 2026
- KRA public notice 2337 — market rate Jan–Mar 2026
- KRA public notice 2311 — market rate Oct–Dec 2025
- KRA public notice 2231 — market rate Jul–Sep 2025
- KRA public notice 2171 — market rate Apr–Jun 2025
- Eastleigh Voice — market rate Jan–Mar 2025
- PwC — Kenya corporate tax rate
Rates last checked 13 Sep 2026. Estimates only, not tax or legal advice.