The Kenya Revenue Authority (KRA) has announced that Affordable Housing Levy (AHL) deductions will entail employees’ regular allowances.

In a statement on Tuesday, August 15, 2023, KRA said that the “regular cash allowances” will include housing allowances, commuter allowances and car allowances.

The deductions will, however, not be implemented on non-cash allowances as well as those which are not implemented regularly.

“The Finance Act 2023 introduced the AHL with effect from 1st July, 2023. Kenya Revenue Authority has been appointed as the collecting Agent of the Affordable Housing Levy. Gross monthly salary constitutes basic salary and regular cash allowances. This includes housing, travel or commuter, car allowances and such regular cash payments and would exclude those that are non-cash as well as those not paid regularly such as leave allowance, bonus, gratuity, pension, severance pay or any other terminal dues and benefits,” KRA stated.

KRA also announced that no one would be spared in the deductions.

“All employees irrespective of their contract of service shall pay the affordable housing levy. Taxpayers paying housing levy under Section 31B of the Employment Act are not eligible for Affordable Housing Relief under the Section 30A of the Income Tax Act Cap. 470,” KRA added.

About Housing Levy

AHL entails 1.5 percent of the employee’s gross monthly salary and an additional 1.5 per cent of the employee’s monthly gross salary paid by the employer.

With effect from July 1, 2023, KRA ordered that all employers are required to deduct the AHL from the employee’s gross salary and remit together with the employer’s contribution.

Over the weekend, President William Ruto defended the Housing Levy, saying that its major aim is to create jobs.

“Many people were wondering ‘Why are you pushing this housing agenda? Who told you we need a house? We all have houses what is this?’ It wasn’t so much about the houses it was so much about the jobs for the young people of Kenya,” Ruto said.