- The housing levy is a 3% deduction on all salaried employees to build up to 250,000 low-cost homes annually.
What You Need to Know About the Housing Levy
07 May, 2024 04:04 PM
Article 43(1)b of the Constitution of Kenya outlines that every Kenyan has a right to accessible and adequate housing and reasonable standard sanitation.
When the Big Four agenda was launched in 2018 by then-President Uhuru Kenyatta, decent, affordable housing was among the fundamental pillars. The plan was to build 500,000 housing units called ‘Boma yangu’ in cities and metropolitan areas.
Quality and affordable housing are among the critical problems in the country, which has a fast-growing population.
The ruling government, led by President William Ruto, introduced affordable housing to enhance affordable houses and curb the problem.
On March 18, 2024, President Ruto passed the Affordable Housing levy bill into law.
Before this, it faced criticism, especially from the opposition members who were against its implementation because they viewed the taxation as an oppression of Kenyans.
The government has collected 26.8 billion Kenyan shillings so far and is set to collect up to 73 billion annually.
What Is Housing Levy?
The housing levy is a 3% deduction on all salaried employees to build up to 250,000 low-cost homes annually.
It is a mandatory contribution that employers and employees make.
The law requires every employer to contribute 1.5% of an employee’s gross income and the employee to contribute 1.5% of their monthly salary, making up to 3%.
The act also mandates that unemployed people contribute 1.5% of their gross income to the housing levy.
Salaried and non-salaried persons should remit the levy on the 9th day of every month.
Who Is Responsible for The Collection?
The Kenya Revenue Authority (KRA) is responsible for collecting the housing levy.
The agency considers gross salary as the basic salary of an employee plus any other allowances, that is, commuter, housing allowance, car allowances, and any other allowance one receives.
How to Pay
All employees are required to declare the affordable housing levy under sheet ‘M’ of the PAYE ’return on tax, generate a pay slip under the tax head’ agency revenue’ and tax subhead ‘housing levy’ and make the payments at KRA agents banks or mobile phones through e citizen pay bill number 22222 or dial *221#.
Offences and Penalties
Whether employed or unemployed, if a person does not pay the housing levy by the due date, there will be a 3% penalty on the unpaid amount.
The penalties will accrue every month and are recovered as a civil debt.