The Kenya Revenue Authority (KRA) has announced changes to Pay As You Earn (PAYE) computation effective December 27, 2024, under the Tax Laws (Amendment) Act, 2024.
In a statement on Thursday, December 19, KRA said the changes will be applicable in the computation of PAYE for December 2024 and subsequent periods.
The changes, according to the taxman, will affect deductible contributions including the Housing Levy, Social Health Insurance Fund (SHIF), post-retirement medical funds, changes to tax reliefs and clarifications on employment gains and profits.
The changes are as follows:
1. Amounts deductible in determining the taxable employment income shall include:
a. Amount deducted as Affordable Housing Levy pursuant to the Affordable Housing Act, 2024.
b. Contribution to a post-retirement medical fund subject to a limit of Kshs. 15,000 per month.
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c. Contributions made to the Social Health Insurance Fund (SHIF).
d. Mortgage interest, not exceeding Kshs. 360.000 per year (Kshs. 30,000 per month), upon money borrowed by a person from one of the first six financial institutions specified in the Fourth Schedule to the Income Tax Act, to purchase or improve premises occupied by the person for residential purposes.
e. Contribution made to a registered pension or provident fund or a registered individual retirement fund up to a limit of Kshs. 360,000 per year (Kshs. 30,000 per month).
KRA stated that tax reliefs will cease to apply to Affordable Housing Tax Relief and Post Retirement Medical Fund Relief.
Gains and profits from employment
The authority also stated that gains and profits from employment shall not include:
a. The value of a benefit, advantage, or facility granted in respect of employment, where the aggregate value is less than Kshs. 60,000 per year (Kshs. 5,000 per month).
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b. The first Kshs. 60.000 per year (Kshs. 5,000 per month) on the value of meals provided by an employer.
c. An amount not exceeding Kshs. 360.000 paid by an employer as a gratuity or similar payment in respect of employment or services rendered for each year of service paid into a registered retirement pension scheme.
KRA stated that the changes form part of its commitment to ensuring support to all persons in their tax compliance journey.
For further information or clarification, taxpayers can contact KRA on 020-4-999-999 or 0711-099-999. They can also send an email via to callcentre@kra. go.ke or visit the nearest KRA Tax Service Office.
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