When an employer provides something with monetary value to an employee instead of (or in addition to) cash pay, KRA values that benefit and adds it to the employee's taxable income. The cash deductions (NSSF, SHIF, AHL) remain on the cash gross — only PAYE picks up the BIK.

Car benefit (Income Tax Act §5(4))

Where the employer owns or leases a vehicle and lets the employee use it (including for private journeys), the monthly taxable benefit is the higher of two figures:

• 2% of the original cost of the vehicle when first acquired by the employer.
• The KRA prescribed rate for the engine size band (Appendix 7C of the Employer's Guide).

Housing benefit (Income Tax Act §5(3))

When the employer provides housing — owned, rented or any cost borne — the monthly taxable benefit for a non-director employee is the higher of:

• 15% of total emoluments (gross excluding the housing benefit itself).
• Rent actually paid by the employer.

Minus any rent paid by the employee back to the employer (rent recovered). Agricultural employees use 10% in place of 15%.

Other common benefits

• School fees — actual fees paid for the employee's child are fully taxable on the employee, unless paid out of a fund already taxed at corporate level.
• Telephone / internet — actual cost paid by the employer is taxable.
• Electricity / water — actual cost paid by the employer is taxable.
• Meals — first KES 4,000/month of subsidised meals is non-taxable; the excess is taxable.
• Medical cover — premiums paid by the employer for an approved medical scheme are NOT taxable (capped at KES 1,000,000/year per employee).

Setting up a benefit in Vendly

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Tax & Reliefs tab → Non-Cash Benefits

Click 'Add benefit' and pick the type. CAR and HOUSING get specific input panels — the calculator computes the taxable value server-side from the formula. Other types take a monthly value directly.