Affordable Housing Levy explained, with worked examples
The Housing Levy returned in March 2024 under new legislation. We walk through who pays, how much, when it became tax-deductible, and three worked examples.
The Affordable Housing Levy is one of the youngest deductions on a Kenyan payslip - and the most legally tested. After being struck down by the High Court in late 2023, it was reintroduced under fresh legislation and has been live since March 2024.
A short history
The levy first appeared in the Finance Act of 2023, took effect in July 2023 at 1.5% of gross, and was challenged in court three months later. In November 2023 the High Court declared the levy unconstitutional, and collections stopped on 1 January 2024. Parliament re-enacted it under the standalone Affordable Housing Act, and from 19 March 2024 it has been deducted again - this time on firmer legal ground.
Who pays, and how much
| Party | Rate | Basis |
|---|---|---|
| Employee | 1.5% | Gross monthly pay |
| Employer | 1.5% | Gross monthly pay (matched) |
| Total | 3.0% | of gross, paid to KRA |
The employer's portion is in addition to gross - it is a true cost on top of payroll, not a deduction from the employee. KRA collects the levy on behalf of the Affordable Housing Board.
Three worked examples
| Gross pay | Ksh 35,000.00 |
| AHL - employee (1.5%) | Ksh 525.00 |
| AHL - employer (1.5%) | Ksh 525.00 |
| Total levy collected by KRA | Ksh 1,050.00 |
| Gross pay | Ksh 150,000.00 |
| AHL - employee (1.5%) | Ksh 2,250.00 |
| AHL - employer (1.5%) | Ksh 2,250.00 |
| Total levy collected by KRA | Ksh 4,500.00 |
| Gross pay | Ksh 600,000.00 |
| AHL - employee (1.5%) | Ksh 9,000.00 |
| AHL - employer (1.5%) | Ksh 9,000.00 |
| Total levy collected by KRA | Ksh 18,000.00 |
Where it sits on the payslip
AHL is a statutory deduction, alongside PAYE, SHIF and NSSF. Best practice - and what KRA expects in iTax filings - is to compute the levy on full gross pay (cash + taxable allowances), then deduct the employee's portion from gross before computing PAYE.
- 01Compute gross pay including taxable allowances and non-cash benefits.
- 02Deduct NSSF, SHIF, AHL (employee) and pension to arrive at taxable pay.
- 03Apply PAYE bands to the taxable pay.
- 04Deduct PAYE from gross to arrive at net pay.
Frequently asked
Is AHL refundable?
No. Unlike NSSF, AHL is not a personal retirement contribution. It funds the National Housing Development Fund and is non-refundable, regardless of whether the employee benefits from an affordable housing unit.
Do casual workers pay AHL?
Yes. The Affordable Housing Act applies to all employees with no exemption based on contract type. Daily-rate casual labour is computed on the daily gross.
What about the self-employed?
Self-employed Kenyans contribute at 1.5% of their gross income, declared annually. There is no employer match in this case.