SHIF replaces NHIF: what every Kenyan SME needs to do this month
The Social Health Insurance Fund replaced NHIF on 1 October 2024. Here's exactly what changed for your payroll, and the steps you need to take before the next remittance.
On 1 October 2024 the National Health Insurance Fund (NHIF) was formally replaced by the Social Health Insurance Fund (SHIF), administered by the new Social Health Authority. For payroll, this is the biggest single change Kenyan employers have absorbed since the affordable housing levy - and it affects every employee, regardless of salary band.
What changed
NHIF used a stepped contribution table topping out at Ksh 1,700 per month. SHIF replaces that with a flat percentage of gross monthly salary. The remitting authority changes too - payments now go to the Social Health Authority (SHA), not NHIF.
| NHIF (until Sep 2024) | SHIF (from Oct 2024) | |
|---|---|---|
| Basis | Stepped table | Percentage of gross |
| Employee rate | Up to Ksh 1,700/mo | 2.75% |
| Minimum | Ksh 150/mo | Ksh 300/mo |
| Tax-deductible? | No | Yes (from 27 Dec 2024) |
| Remitted to | NHIF | Social Health Authority |
What you need to do
- 01Register your business with the Social Health Authority via the SHA portal if you have not already done so.
- 02Move every employee's NHIF number across to their SHA record (the system maps them automatically once they're registered).
- 03Update your payroll software's deduction line from "NHIF" to "SHIF" and switch the calculation method from stepped to 2.75% of gross.
- 04Confirm the SHIF deduction is being applied before PAYE in your tax computation - it became fully tax-deductible on 27 December 2024.
- 05Re-issue payslips for any month you ran on the old NHIF method and reconcile the difference.
A worked example
| Gross monthly pay | Ksh 80,000.00 |
| NHIF (old) - would have been | Ksh 1,400.00 |
| SHIF (new) - 2.75% of gross | Ksh 2,200.00 |
| Difference | Ksh +800.00 |
| Tax saving (30% band) | Ksh −240.00 |
| Net impact on take-home | Ksh −560.00 |
Common questions
Do directors and shareholders pay SHIF?
Yes, if they receive a salary through PAYE. Dividend-only directors do not pay SHIF on their dividends.
What about expatriate employees?
All employees on a Kenyan payroll pay SHIF, regardless of nationality. Expat employees on a global health policy still contribute - there is no opt-out.
When are remittances due?
By the 9th of the month following deduction, the same cadence as the old NHIF deadline. Late payment attracts a penalty of 2% per month, compounded.