What does this payroll term mean?
55 terms
Also called Housing levy, AHL
A levy under the Affordable Housing Act 2024: 1.5% of an employee's gross salary, matched by 1.5% from the employer, remitted to KRA. The employee's share is deductible when calculating PAYE.
A cash payment on top of basic pay, such as house, transport or hardship allowance. Most allowances are taxable and form part of gross pay.
Paid leave of at least 21 working days after 12 consecutive months of service under the Employment Act, accruing at about 1.75 days per month.
Also called Back pay
Pay owed for past periods, such as a backdated salary increase. PAYE is computed against the months the pay relates to and declared in the P10 lump-sum sheet.
Also called Basic salary
The fixed salary or wage before allowances, overtime, bonuses and deductions. It is often the base for overtime, leave pay and terminal dues.
Also called 13th cheque
A one-off or periodic extra payment, such as a 13th cheque or performance bonus. It is fully taxable in the month paid, which can push that month's PAYE into a higher band.
The taxable value of an employer-provided car used privately, generally the higher of 2% of cost per month or the prescribed rate. It is added to taxable pay but not paid in cash.
Also called Casual worker, Casual labourer
A person engaged for no longer than 24 hours at a time and paid at the end of each day. Casuals employed continuously for a month or more convert to term contracts under s.37 of the Employment Act.
Also called Taxable pay, Taxable income
Gross pay minus allowable deductions (NSSF and pension within limits, SHIF, AHL, PRMF, mortgage interest). PAYE bands are applied to this figure.
Also called Two-thirds rule, One-third rule
Section 19(3) of the Employment Act: total deductions from wages must not exceed two-thirds of those wages, so the employee keeps at least one third.
Also called PWD exemption
Employees with a KRA disability exemption certificate have the first KES 150,000 of monthly income exempt from PAYE.
Also called Total cost of employment, Cost to company
What an employee really costs: gross pay plus employer NSSF, employer AHL, NITA and any benefits or insurance the employer pays.
Also called Electronic Tax Invoice Management System
KRA's electronic Tax Invoice Management System, used by businesses to issue tax invoices. Salaries paid to employees do not need eTIMS invoices, but payments to contractors and suppliers generally do.
Also called FBT
Tax paid by the employer, at the corporate rate, on the benefit of a loan given to an employee at an interest rate below KRA's prescribed market rate. It is declared in the P10 FBT sheet.
A lump sum paid to an employee, usually at the end of a contract, in recognition of service. Under the Finance Act 2026 it can be tax-exempt if contract and contribution conditions are met.
Also called Gross salary
Total earnings for a period before deductions: basic pay plus taxable allowances, overtime, bonuses and taxable benefits.
Also called HELB
A student-loan repayment that employers must deduct from salaries of Higher Education Loans Board loanees, as notified by HELB, and remit to HELB. It is a post-tax deduction.
Under the wage orders, employers who do not provide housing must pay a housing allowance, commonly 15% of the basic minimum wage, on top of the minimum wage.
Also called Value of quarters
The taxable value of housing provided by the employer, shown in column C of the P9A.
A tax relief of 15% of qualifying life, education or health insurance premiums, up to KES 5,000 per month, subtracted from tax charged.
KRA's online portal for PIN registration, filing returns (including P10 PAYE and individual returns) and generating payment slips (PRNs).
Also called PIN, Personal Identification Number
The 11-character Personal Identification Number issued by the Kenya Revenue Authority, e.g. A012345678B. Every employee on a PAYE return needs one.
Also called LEL
The NSSF earnings threshold for Tier I contributions: KES 9,000 per month from February 2026 (KES 8,000 from Feb 2025 to Jan 2026).
The lowest basic pay legally allowed for an occupation and location, set by Regulation of Wages Orders. The 2026 orders took effect on 1 May 2026.
Also called Home ownership relief
Interest on a loan to buy or improve an owner-occupied home, deductible from taxable pay up to KES 30,000 per month.
Also called Take-home pay, Net salary
What the employee receives after all deductions: gross cash pay minus NSSF, SHIF, AHL, PAYE and other deductions such as loans or HELB.
Also called Industrial Training Levy, NITA
The Industrial Training Levy paid by employers to the National Industrial Training Authority, KES 50 per employee per month, declared and paid with the PAYE return.
Also called Benefit in kind
A benefit given in kind, such as a car, housing, school fees or utilities. It is taxable if the total exceeds the monthly exemption threshold.
The advance written warning either party must give to end employment, e.g. 28 days (one month) for monthly-paid staff, unless the contract gives more.
Also called National Social Security Fund
The National Social Security Fund, Kenya's mandatory pension scheme under the NSSF Act 2013. Employee and employer each contribute 6% of pensionable earnings up to the Upper Earnings Limit.
Also called Tier 1
6% of earnings up to the Lower Earnings Limit, paid by both employee and employer. The maximum is KES 540 each from February 2026.
Also called Tier 2
6% of earnings between the LEL and UEL, paid by both sides; the maximum is KES 5,940 each from February 2026. It may go to an approved contracted-out scheme instead of NSSF.
Also called P10, PAYE return
The employer's monthly PAYE return filed on iTax, listing each employee's pay, deductions and PAYE, together with Housing Levy and NITA.
Also called P9A, Tax Deduction Card
The employer's annual Tax Deduction Card showing an employee's monthly pay, deductions, reliefs and PAYE. Employees use it to file their annual iTax return.
Pay equal to the wages for the notice period, given instead of written notice when employment ends immediately (Employment Act s.36).
Also called PAYE, Pay As You Earn, Income tax
Income tax that employers deduct monthly from employees' pay using graduated bands (10% to 35%) after personal relief, remitted to KRA by the 9th of the next month.
Also called Payroll sheet
A table listing every employee's earnings, deductions, net pay and employer contributions for a pay period. It is the basis for payments and statutory returns.
Also called Itemised pay statement, Pay slip
The written statement an employer must give at or before each payment (Employment Act s.20). It shows gross pay, each deduction and its purpose, and how net pay was paid.
Also called Pension relief
Contributions to NSSF and registered pension or provident funds reduce taxable pay, limited to the lowest of actual contributions, 30% of pensionable income, or KES 30,000 per month.
Also called Pensionable pay
The pay on which pension contributions are calculated. For NSSF this is effectively gross salary, and for the tax deduction limit it is used for the 30% cap.
Also called Subsistence allowance
A daily allowance for work travel away from the usual workplace. It is tax-free up to the statutory daily limit, and any excess is taxable.
A fixed tax credit of KES 2,400 per month (KES 28,800 per year) for resident individuals, subtracted from tax charged on their primary employment.
Also called PRMF
A registered fund for medical cover after retirement. Employee contributions are deductible from taxable pay up to KES 15,000 per month.
Also called PRN, Payment slip
The reference generated on iTax for each tax payment, used when paying at a bank or via M-PESA paybill 222222.
Also called Prorated salary
A proportion of the monthly salary paid for part of a month, e.g. for a new joiner or leaver, based on calendar or working days.
Also called Second job
A second job alongside a main (primary) employer. PAYE on secondary employment is deducted at the top rate (35%) without personal relief.
A payment of at least 15 days' pay per completed year of service on termination, due under the Employment Act where the employee is not in NSSF or another pension or gratuity scheme.
Also called Redundancy pay
Compensation on redundancy of at least 15 days' pay for each completed year of service (Employment Act s.40), in addition to notice, leave and other dues.
Also called Social Health Authority, NHIF
The Social Health Authority, the body under the Social Health Insurance Act 2023 that runs SHIF and replaced NHIF. Employers register on the SHA portal and remit employee contributions.
Also called Social Health Insurance Fund
The Social Health Insurance Fund contribution: 2.75% of an employee's gross salary, minimum KES 300, no cap and no employer match. It is deductible for PAYE.
Also called Final dues, Terminal benefits
Everything owed when employment ends: unpaid salary, accrued leave, notice pay, severance or service pay and any gratuity, less lawful deductions.
Also called UEL
The NSSF ceiling on pensionable earnings: KES 108,000 per month from February 2026 (KES 72,000 from Feb 2025 to Jan 2026). Earnings above it attract no NSSF.
Also called Work Injury Benefits Act, Work injury insurance
The Work Injury Benefits Act 2007, which requires employers to insure employees against work injuries and occupational diseases and to compensate injured workers.
Also called WHT
Tax deducted at source from payments to non-employees, such as consultants' fees, and remitted to KRA. It is not PAYE.
P10 is the employer's monthly PAYE return on iTax covering all employees. The P9A is the annual card for each employee summarising the year's pay and PAYE, which the employee uses for their own tax return.
No. SHIF replaced NHIF from October 2024. It is 2.75% of gross salary with a KES 300 minimum, run by the Social Health Authority, and unlike the old NHIF bands it has no cap.
The housing levy is shared: 1.5% from the employee and 1.5% from the employer. NITA is paid only by the employer, at KES 50 per employee per month.
Rates last checked 13 Sep 2026. Estimates only, not tax or legal advice.