A practical explanation of the Affordable Housing Levy, its calculation base and the checks employers need before filing.
The Affordable Housing Levy is one of the newer additions to the Kenyan payroll landscape, and it is also one of the most frequently miscalculated. Not because the calculation is complex, but because the base it applies to and the split between employer and employee are easy to get wrong when the payroll system is not configured for it.
The calculation base
The levy is calculated as a percentage of the employee’s gross monthly salary. The same earnings base used for SHIF applies here, basic pay plus regular allowances. The levy is not calculated on net pay, and it is not reduced by other deductions. Getting the base right is the first step; everything else follows from it.
The contribution is split between the employee and the employer, with each side paying their portion. The employee portion is deducted from salary; the employer portion is an additional cost. Both must be remitted together, and both must appear separately on the payslip.
Common errors
The most common error is calculating the levy on a reduced base, after other deductions, or on basic pay only without allowances. The second is remitting only the employee portion and treating the employer portion as a separate, later payment. The third is not showing the split on the payslip, which leaves employees unable to verify their deduction.
Before you file
The levy calculation should begin with the correct salary base and clearly separate employee and employer portions. Treat the calculation as part of the payroll control process, not as a last-minute filing task. The return should be prepared from the payroll register, reviewed against the payslips, and approved before submission.
Document the rate used, the earnings included and the reviewer who approved the schedule. That evidence makes month-end questions much easier to answer, and if the levy rules change, the documentation shows exactly what was applied and when.