Housing Levy Payroll Declaration (Kenya)

A Housing Levy Payroll Declaration in Kenya confirms the declared information and the maker's responsibility for its accuracy.

The Housing Levy Payroll Declaration in Kenya operates within the broader payroll compliance framework alongside Pay As You Earn (PAYE) deductions under Section 37 of the Income Tax Act Cap. 470, National Social Security Fund (NSSF) contributions under the NSSF Act No. 45 of 2013 as amended, and National Hospital Insurance Fund (NHIF) contributions under the NHIF Act Cap. 255, now transitioning to the Social Health Authority (SHA) under the Social Health Insurance Act 2023. All these deductions appear on a single payslip and must be remitted to the KRA by the 9th day of the month following the month of deduction under Section 37A of the Income Tax Act Cap. 470 as amended by the Affordable Housing Act 2024.

The Kenya Revenue Authority administers the Housing Levy under the KRA iTax system, which is the integrated tax administration platform through which employers file returns and remit amounts due. The iTax portal at itax.kra.go.ke requires employers to file a monthly Housing Levy return separately from the monthly PAYE return. The return lists each employee's name, KRA Personal Identification Number (PIN), gross pay, employee levy deducted, employer levy contribution, and the total remittable amount.

The Affordable Housing Act 2024 imposes penalties under Section 31 for late remittance — a penalty of 5% of the levy due per month the amount remains unpaid, plus interest at 1% per month on the unpaid balance. The KRA Commissioner General has power under the Tax Procedures Act No. 29 of 2015 to assess, collect, and enforce payment of the Housing Levy in the same manner as any other tax administered by KRA. Employers who wilfully fail to deduct or remit commit an offence under the Tax Procedures Act and are liable to prosecution.

The Housing Levy Payroll Declaration is distinct from the employer's annual P9 Form (tax deduction card) issued to each employee for the purposes of filing an individual income tax return. The declaration is a monthly payroll-level document, whereas the P9 Form is an annual summary per employee. Both must be retained by the employer for a minimum of 5 years under Section 23 of the Tax Procedures Act No. 29 of 2015, which sets the record-keeping obligation for all persons required to keep records for tax purposes in Kenya.

The National Construction Authority (NCA) and private employers in the construction sector are subject to the same Housing Levy obligations as other sectors. Employees earning above the minimum wage set by the Labour Commissioner under the Labour Institutions Act No. 12 of 2007 are subject to levy deduction on their gross pay including basic salary, housing allowance, transport allowance, and all other cash emoluments before any statutory deductions.

The Affordable Housing Levy is administered alongside the Kenya Slum Upgrading Programme (KENSUP) and the Kenya Informal Settlements Improvement Project (KISIP), both managed by the State Department for Housing. The Affordable Housing Fund established under the Affordable Housing Act 2024 is a dedicated account at the Central Bank of Kenya (CBK) into which all levy remittances are deposited. The Cabinet Secretary for Housing is required to publish quarterly reports on Fund inflows, disbursements, and the status of housing projects funded under the Act. Employers can verify their remittance history by logging into their KRA iTax account and reviewing the Housing Levy Return history tab. The KRA iTax system generates a KRA-issued payment receipt for each successful remittance, which the employer should retain as evidence of compliance. The National Construction Authority (NCA) published circular NCA/2024/07 reminding all contractors of their Housing Levy obligations for employees on construction sites. The Affordable Housing Act 2024 also requires the Kenya Revenue Authority to share Housing Levy remittance data with the State Department for Housing so that individual employee contribution records can be credited to their Affordable Housing Fund accounts. Employers with multiple payroll runs in a month must aggregate all payrolls for the month and file a single monthly Housing Levy return covering the entire month's gross payroll. The levy applies to employees regardless of the type of employment contract provided the worker meets the statutory definition of an employee under the Employment Act No. 11 of 2007. Where an employer engages independent contractors rather than employees, the Housing Levy does not apply to contractor payments, but the employer should document the contractual basis carefully to withstand KRA audit scrutiny.

A Housing Levy Payroll Declaration in Kenya is required every month by every employer who has employees on payroll, from the first month in which the Affordable Housing Act 2024 came into force. Every registered employer with a KRA PIN and an active Pay As You Earn (PAYE) obligation must file the Housing Levy return and remit by the 9th of the following month regardless of the number of employees or the size of the payroll.

The declaration is needed when an employer processes payroll for the month and must record the 1.5% employee levy deducted from each employee's gross pay and the matching 1.5% employer contribution. The declaration provides the supporting schedule behind the KRA iTax remittance — it lists each employee by name, KRA PIN, gross pay, and levy amounts so that the total remitted to KRA can be traced to individual employees.

A Housing Levy Payroll Declaration is required when an employer hires a new employee mid-month for the first time the new hire's salary appears on payroll. The declaration must include the pro-rated gross pay and levy for the partial month.

The declaration is needed when an employer conducts a payroll audit or is subject to a KRA audit under the Tax Procedures Act No. 29 of 2015. KRA audit officers require employers to produce the monthly Housing Levy declarations alongside PAYE returns, bank remittance receipts, and employee payslips to verify that amounts deducted from employees were actually remitted to KRA.

A Housing Levy Payroll Declaration is required when an employer is preparing annual financial statements and the external auditor requires evidence of payroll tax compliance. The monthly declarations serve as source documents supporting the payroll expenses, statutory deductions liabilities, and remittances disclosed in the employer's audited accounts.

The declaration is also needed when an employee requests a certificate of levy deduction — for example, to support an application for a housing allocation under the Affordable Housing Programme administered by the State Department for Housing — and the employer must retrieve and certify the relevant monthly declarations showing the employee's levy history.

A Housing Levy Payroll Declaration is needed when a merger, acquisition, or business transfer takes place and the successor employer assumes the employees of the predecessor. The successor employer must file Housing Levy returns from the first payroll month of the transfer and retain the predecessor's prior declarations as part of the due diligence record. The declaration is also required when an employer applies for a KRA Tax Compliance Certificate (TCC) — a document required for public procurement tenders under the Public Procurement and Asset Disposal Act No. 33 of 2015. The KRA TCC verification process checks that all PAYE, NSSF, SHA, and Housing Levy returns are filed and all outstanding balances settled. An employer with outstanding Housing Levy arrears will not obtain a clean TCC. The declaration is needed when an employer participates in the Kenya Revenue Authority Voluntary Tax Disclosure Programme, filing outstanding Housing Levy returns for prior periods and settling arrears with reduced penalties. The declaration is also required when an employer's internal or external auditor conducts a payroll compliance review — the auditor will trace monthly levy amounts on the payroll schedules to the iTax filing records and bank remittance receipts, and any gap must be explained and remedied before the audit opinion is issued.

A Kenya Housing Levy Payroll Declaration under the Affordable Housing Act 2024 must contain the following essential elements to confirm KRA compliance and audit readiness.

Employer Identification: Full legal name of the employer, KRA PIN, business registration number from the Business Registration Service (BRS) at eCitizen, registered physical address, and the payroll period (month and year) covered by the declaration. The employer's P9 series reference should be noted where the declaration supports an annual reconciliation.

Employee Payroll Schedule: A complete list of all employees on payroll for the declaration month, including: full name of each employee, KRA PIN of each employee (mandatory for levy remittance via iTax), employee number or staff ID, gross monthly pay (including basic salary, housing allowance, transport allowance, and all cash emoluments as defined under the Income Tax Act Cap. 470 Schedule 1), the 1.5% employee levy deducted from gross pay, and the 1.5% employer matching contribution.

Levy Computation Summary: Total gross payroll for the month across all employees, total employee levy deducted (1.5% of total gross pay), total employer contribution (1.5% of total gross pay), and total levy payable to KRA (sum of employee and employer portions). The computation must match the amount remitted via KRA iTax payment registration number (PRN).

Remittance Details: The KRA iTax Payment Registration Number (PRN) generated upon filing the monthly return, the bank or mobile money reference for the actual payment, the date of remittance, and confirmation that payment was received by KRA. The remittance must reach KRA by the 9th of the month following the payroll month under the Affordable Housing Act 2024 to avoid the 5% penalty per month under Section 31.

Declaration and Authorisation: A signed declaration by the employer's authorised signatory — typically the Chief Finance Officer, Human Resources Director, or company director — confirming that the information in the declaration is true and complete. The signatory's full name, designation, and KRA PIN should appear alongside the signature and date.

Record Retention: The completed declaration must be retained for a minimum of 5 years under Section 23 of the Tax Procedures Act No. 29 of 2015. The forms-legal.com Kenya Housing Levy Payroll Declaration template includes all mandatory columns and summary rows required by the Affordable Housing Act 2024 and the KRA iTax filing format, with built-in penalty calculation reminders for late filers.

Employee-Level Payroll Schedule: Best practice requires the declaration to be supported by a detailed employee-level schedule listing each employee's name, KRA PIN, staff number, gross pay, employee levy at 1.5%, and employer contribution at 1.5%. Where an employee's gross pay includes a non-cash benefit, the cash value must be included in gross pay for levy purposes under the Affordable Housing Act 2024 unless specifically exempted. Consolidated Annual Reconciliation: At year-end, employers must reconcile total annual Housing Levy remittances against the sum of monthly declarations. Any variance must be corrected by filing an amended return on KRA iTax and paying any balance due with the applicable Section 31 penalty and interest under the Tax Procedures Act No. 29 of 2015. Digital Submission Requirements: All Housing Levy returns must be filed electronically through the KRA iTax portal — paper returns are not accepted. The iTax system requires the employer to upload the employee payroll schedule in the prescribed CSV format before the monthly return can be submitted. KRA provides a downloadable CSV template on the iTax portal. Filing the return without uploading the employee schedule results in a failed submission and the employer remains non-compliant until the complete return is accepted by the system. Record Retention: All monthly payroll declarations, iTax filing acknowledgements, and bank remittance receipts must be retained for a minimum of 5 years under Section 23 of the Tax Procedures Act No. 29 of 2015 and must be produced on demand during a KRA audit. The forms-legal.com Kenya Housing Levy Payroll Declaration template includes all mandatory columns and summary rows required by the Affordable Housing Act 2024 and the KRA iTax filing format, with built-in penalty calculation reminders for late filers. Payslip Integration: Every employee payslip issued under the Employment Act No. 11 of 2007 must separately itemise the Housing Levy deduction alongside PAYE, NSSF, and SHA contributions. The payslip serves as the employee's personal record of levy deductions and is required when the employee applies for housing allocation under the Affordable Housing Programme administered by the State Department for Housing and Urban Development. Employers who issue payslips electronically through payroll software — including Sage, QuickBooks, or government-approved payroll systems — must confirm the Housing Levy deduction appears as a distinct line item, not bundled into a general statutory deductions category. Employer KRA PIN Validation: Before filing the monthly Housing Levy return on KRA iTax, the employer must verify that every employee's KRA PIN in the payroll schedule is active and correctly formatted — a 10-character alphanumeric code beginning with 'A' for individuals or 'P' for companies. Invalid or inactive KRA PINs cause the iTax submission to fail and delay the employer's compliance, potentially triggering the Section 31 late penalty under the Affordable Housing Act 2024 even where the employer attempted timely filing. The KRA PIN validation tool on the iTax portal allows employers to batch-check all employee PINs before submitting the monthly return.