The Affordable Housing Levy is a mandatory contribution introduced under the Affordable Housing Act, 2024. It requires both employers and employees to contribute 1.5% of the employee's gross salary towards the national affordable housing programme. The levy took effect on March 19, 2024, following a ruling by the Supreme Court of Kenya upholding its constitutionality.
How the Housing Levy Is Calculated
The Housing Levy is computed as 1.5% of the employee's gross monthly salary. The employer must match this with an equal 1.5% contribution, bringing the total remittance to 3% of gross salary. Gross salary includes basic pay, allowances, bonuses, overtime, and commissions. There is no upper cap on the levy amount.
| Gross Salary (KES) | Employee 1.5% | Employer 1.5% | Total Remittance |
|---|---|---|---|
| 30,000 | 450 | 450 | 900 |
| 50,000 | 750 | 750 | 1,500 |
| 80,000 | 1,200 | 1,200 | 2,400 |
| 100,000 | 1,500 | 1,500 | 3,000 |
| 150,000 | 2,250 | 2,250 | 4,500 |
Who Must Pay the Housing Levy
- All employees in formal employment, whether in the public or private sector.
- Employers must deduct the employee portion and add their matching contribution.
- Self-employed individuals and persons in the informal sector are not currently required to contribute, though voluntary registration is available.
- Kenyan citizens working for foreign organizations within Kenya are also subject to the levy.
Remitting the Housing Levy via iTax
The Housing Levy is remitted through the KRA iTax platform alongside PAYE. Employers must file the monthly PAYE return (P10) which now includes a section for the Housing Levy. The deadline for remittance is the 9th of the following month. Late payment attracts a penalty of 3% of the amount due plus interest at 1% per month on the unpaid amount.
The employee's 1.5% Housing Levy contribution is not tax-deductible for PAYE purposes. It is deducted from gross salary after computing PAYE, which means it does not reduce the employee's taxable income.
