KRA Advice Employers To Deduct Housing Levy From Employees’ Gross Salaries

In a significant move, the Kenya Revenue Authority (KRA) has mandated employers to initiate deductions for the Affordable Housing Levy (AHL) from employees’ salaries from March 2024. This directive aligns with the recent enactment of the Affordable Housing Bill by President William Ruto, marking a pivotal step in the nation’s housing agenda.

 Under the provisions of the Affordable Housing Act, of 2024, KRA assumes the pivotal role of ‘Collector’ for the AHL. Employers are now required to deduct the levy from employees’ gross salaries, alongside the employer’s corresponding contribution.

 The AHL scheme requires employees to contribute 1.5% of their gross monthly salary, a sum matched by an additional 1.5% from the employer. Failure to comply with this directive will result in penalties equivalent to three per cent of the unpaid funds for every month outstanding, as outlined in KRA’s notice. Individuals earning income in Kenya are also obliged to remit 1.5% of their gross income as the Affordable Housing Levy to KRA, further expanding the reach of the housing initiative.

 The deadline for AHL remittance is set as the 9th working day following the end of the month in which the gross salary was due or gross income was received or accrued. To facilitate this process, employers must diligently declare the AHL under sheet “M” of the PAYE return on iTax, generate a payment slip under the tax head “agency revenue” and tax sub-head “Housing Levy”, and subsequently make payments at KRA agent banks or through mobile money via eCitizen.

 Additionally, Lands and Housing Cabinet Secretary Alice Wahome shared insights into the initiative’s progress, noting that it has already generated employment for 120,000 individuals. Projections suggest that by year-end, this figure will increase significantly, with an estimated 300,000 individuals employed across various construction sites nationwide.