Kenya Company Car Benefit Calculator

A perk you never see in your bank account, taxed all the same

A company car feels free. You drive it, the employer pays for it, and nothing leaves your salary. Kenyan tax does not see it that way. The private use of an employer-provided vehicle is a non-cash benefit, so a notional value is added to your taxable pay and run through PAYE alongside your cash salary. You do not receive that value in money, yet you are taxed on it as though you did. This calculator isolates exactly how much extra PAYE the car costs you each month, which is the number that actually matters when you weigh a company car against a cash car allowance.

How the taxable value is fixed

The benefit this tool applies is the higher of two figures: 2 percent of the vehicle's initial cost per month, or the monthly lease cost if the employer leases rather than owns. That is the comparison the calculator runs. Leave the lease field at zero for a company-owned car and it uses the 2 percent measure on its own; enter a lease figure and it takes whichever is larger. One honest caveat: the law also lets the Commissioner apply a prescribed scale for older or written-down vehicles, and this tool does not reproduce that scale. It models the cost-based and lease-based measures only, which is what most employers use for a recent vehicle. Treat 2 percent as the rate this calculator applies and confirm the current basis and any scale with the KRA, since fringe-benefit rules have shifted across recent Finance Acts.

Who this tool is for

It is built for an employee deciding whether to take the keys or the cash, and for a payroll or HR officer who has to load the right benefit value into the PAYE run. If you are negotiating a package, the added-PAYE figure tells you the true monthly cost of the car to you, which you can set against a clean salary increase.

A 3 million shilling car on a 120,000 salary

Say your monthly taxable pay is KES 120,000 and the employer buys a vehicle costing KES 3 million, with no lease. The monthly benefit is 2 percent of KES 3 million, which is KES 60,000. That whole KES 60,000 stacks on top of your existing pay, and because your salary already sits inside the 30 percent band, every shilling of the benefit is taxed at that marginal rate under the rates this calculator applies.

The KES 18,000 is simply 30 percent of the KES 60,000 benefit, because the addition lands entirely in one band. The bars below show your PAYE before and after the car is added to the payroll.

A common mistake is assuming the tax is 2 percent of the car's value. It is not. The 2 percent fixes the benefit; the tax is then your marginal PAYE rate on that benefit, which for a mid-to-senior salary is usually 30 percent or more. On a lower salary, part of the benefit could fall in a lower band, which is why the tool recomputes PAYE on the combined figure rather than applying a flat rate.

Does fuel paid by the employer get taxed too?

The car benefit value covers the use of the vehicle itself. Where an employer also meets private fuel or other running costs, those can be separate taxable benefits in their own right. This calculator values only the vehicle benefit, so add any fuel or driver benefit on top when you assess the full package, and check the current treatment with the KRA.

Is a cash car allowance taxed differently?

Yes, and the difference matters. A cash allowance is ordinary pay, fully taxable at your marginal rate with nothing notional about it. A company car is taxed on the higher of 2 percent of cost or the lease, the basis modelled here. Compare the added PAYE this tool shows against the tax on an equivalent cash allowance to see which leaves you better off, and remember the allowance is yours to keep while the car is not.