PAYE calculator in Kenya

PAYE (Pay As You Earn) is a system of tax collection where employers deduct tax from their employees’ income and remit it to the Kenya Revenue Authority (KRA). It is important for both employers and employees to understand how PAYE works, its taxable income, and how to calculate it using the PAYE calculator Kenya. This guide aims to explain PAYE in detail, using key phrases like PAYE calculator, PAYE calculator Kenya, and PAYE calculator 2024.

For all your PAYE queries or assistance, reach out to info@taxexperts.co.ke or call 0797 777077.

What is PAYE in Kenya?

PAYE, or Pay As You Earn, is the method used by employers to deduct income tax from employees’ earnings. Employers then remit this tax to KRA on behalf of the employees. The PAYE system applies to all income earned from employment, including wages, salaries, allowances, bonuses, and non-cash benefits that exceed Ksh 3,000 per month.

Contact us for more information: info@taxexperts.co.ke | 0797 777077.

Taxable Employment Income

All cash payments, however described, are subject to PAYE, including wages, salary, overtime, commissions, and allowances. Non-cash benefits like company vehicles, housing, and medical cover provided by the employer are also taxable.

Key Taxable Income Categories:

• Cash pay includes salaries, commissions, allowances, bonuses, and director’s fees.
• Non-cash benefits exceeding Ksh 3,000 per month, such as housing or company cars, are taxable.
• Mileage reimbursements exceeding AA Kenya rates are taxable.

For expert tax advice, contact info@taxexperts.co.ke or call 0797 777077.

PAYE Registration and Eligibility

Anyone who employs individuals and pays emoluments is required to register for PAYE with KRA. Once registered, the employer must deduct tax from the employee’s income and remit it on or before the 9th of every month.

PAYE Tax Bands for 2024

Starting July 1, 2023, the new PAYE tax bands in Kenya are as follows:

You can calculate your tax using the PAYE calculator Kenya to determine the exact amount of tax payable based on the current tax rates.

Personal Tax Relief

Every employee receives a personal relief of Ksh 2,400 per month (Ksh 28,800 annually). The relief is deducted from the total tax payable. In addition, there are other forms of tax relief, such as insurance relief (15% of premiums paid) and mortgage interest relief.

To understand how personal relief affects your taxable income, use the PAYE calculator or consult us at info@taxexperts.co.ke | 0797 777077.

PAYE on Pensions

Pensions are taxed at different rates based on the bands below:

This applies to individuals receiving pensions that exceed the tax-free amount. For more information on pension tax, visit taxexperts.co.ke.

PAYE Due Date and Non-Cash Benefits

Employers must remit PAYE to KRA by the 9th of every month. Non-cash benefits, such as company cars, housing, and other utilities, are taxable based on specific valuation rules. For example, company-provided vehicles are taxed based on their market value.

If you’re unsure about the taxable value of non-cash benefits, contact us at info@taxexperts.co.ke | 0797 777077.

Allowable Deductions and Tax Reliefs

Certain deductions and reliefs can reduce your taxable income:

• Mortgage Interest Deduction: Interest paid on loans up to Ksh 300,000 per year for owner-occupied residential premises.
• Pension Contributions: Employees can deduct up to Ksh 20,000 per month (Ksh 240,000 annually) in pension contributions.

Relief is also available for insurance premiums and contributions to the National Hospital Insurance Fund (NHIF).

For a detailed breakdown of allowable deductions, consult with Tax Experts Kenya at info@taxexperts.co.ke or call 0797 777077.

Filing PAYE Returns in Kenya

Employers must file PAYE returns through the iTax system on or before the 9th of each month. The process involves compiling employee tax information and submitting it via KRA’s iTax portal. Late filing incurs penalties, which include:

• 25% of the tax due or Ksh 10,000, whichever is higher.
• A late payment penalty of 5% of the tax due and 1% interest per month.

Use the KRA PAYE calculator 2024 to simplify your tax return process.

For assistance with filing returns, contact info@taxexperts.co.ke or call 0797 777077.

PAYE Penalties

Non-compliance with PAYE regulations results in penalties. For instance, late filing attracts penalties of up to 25% of the tax due or Ksh 10,000, whichever is higher. Additionally, failure to deduct and remit PAYE results in further penalties and interest charges.

To avoid penalties, ensure timely payment and filing. For assistance, reach out to info@taxexperts.co.ke | 0797 777077.

PAYE Calculator Kenya

The PAYE calculator simplifies the process of determining how much tax you owe. By entering your gross income and deductions, the calculator provides an accurate estimate of your tax liability.

For an easy-to-use PAYE calculator, visit taxexperts.co.ke. For more detailed calculations or tax consultations, contact info@taxexperts.co.ke or call 0797 777077.

Final Thoughts

PAYE in Kenya plays a critical role in ensuring tax compliance for both employees and employers. Understanding how to calculate PAYE using the KRA PAYE calculator can make tax planning and compliance simpler. Always remember to remit PAYE on time and claim the available deductions to minimize your tax burden.

For expert tax advice and help with your PAYE calculations, feel free to contact us at info@taxexperts.co.ke or call 0797 777077.