Housing Levy on non-salary income
Whether Kenyan sole traders, landlords and other earners pay the Affordable Housing Levy on non-salary income, when it is due and what lateness costs.
By Achekam · · 4 min read · For Running a business businesses in Kenya
Most people in Kenya know the Affordable Housing Levy as a deduction on a payslip. Fewer realise it reaches beyond salaries. The law that created it sets the levy on income more broadly, which brings in sole traders, consultants, landlords and anyone else earning money in Kenya that is not a salary.
For a sole proprietor this is easy to overlook, because nobody deducts it for you. There is no employer to work it out, no payslip to show it, and no monthly reminder unless you set one. This article explains what the law and KRA say, how the levy interacts with salary, when it is due and what happens if it is not paid.
The levy on gross income
KRA's position, set out in its public notice of 21 March 2024, is that everyone else who receives income in Kenya, or whose income accrues in Kenya, must pay the Affordable Housing Levy to KRA at 1.5% of their gross income. "Everyone else" here means people other than employees having it deducted from salary.
The Act itself takes the same approach. Section 4(2) of the Affordable Housing Act, 2024, in the version dated 1 July 2026 on Kenya Law, imposes the levy at one point five percent of either an employee's gross salary, or a person's gross income received or accrued that is not already subject to the levy as salary.
Note the word gross. The levy is worked out on income before expenses, not on profit. A trader with high takings and thin margins pays on the takings.
You can read sections 4 to 7 in the Affordable Housing Act, 2024 on Kenya Law, which sets out the levy, when it is payable, the power to exempt and the penalty.
Income already levied as salary
The Act avoids charging the levy twice on the same money. Income that has already borne the levy as salary is not levied again as gross income.
So a salaried person with a side business pays the levy through payroll on the salary, and separately on the gross income of the side business. A sole trader with no salary pays only on the business income. A director who draws a salary from their own company has the levy deducted on that salary through the company's payroll; how employers handle that side is covered in declaring and paying the Housing Levy as an employer.
The due date
Section 4(3) of the Act makes the levy payable to the collector, which KRA's notice confirms is KRA, no later than the ninth working day after the end of the month in which the gross income was received or accrued.
That is a monthly cycle. A sole trader who receives income in March owes the levy on it by the ninth working day of April. Because the date is counted in working days, it moves around from month to month. Add it to your tax calendar alongside your other dates; see the Kenyan tax calendar.
Exemptions by Gazette notice
Section 6 of the Act allows the National Treasury Cabinet Secretary to exempt any income, class of income, person or category of persons from the levy by notice in the Gazette.
That means the starting point is that the levy applies, and an exemption has to be found in a specific notice. If you believe your income is exempt, identify the notice that says so, keep a copy with your records, and confirm with KRA or your adviser.
The penalty for unpaid levy
Section 7 imposes a penalty of three per centum of any unpaid levy for each month, or part of a month, that it remains unpaid. The penalty is recoverable summarily as a civil debt.
"Or part of a month" matters: paying a few days late into a new month still adds a full month's penalty. And the penalty keeps adding for as long as the levy is outstanding, so a sole trader who ignores it for a year faces a much larger bill than the levy itself.
Recording payments in your Achekam books
Keeping the levy in the books makes the monthly figure easy to find and the payment easy to prove.
An account for it. Each business in Achekam has its own ledger with a standard chart of accounts, and accounts can be added. Add an account for the housing levy on business income, separate from any levy on staff salaries.
A monthly journal. At month-end, post a manual journal for the levy on that month's gross income. An unbalanced journal, or one dated in a closed month, is refused, and a posted journal can only be corrected by a reversal, so the record stays clean.
The payment. Kenyan tax is paid with the PRN from an iTax payment slip, at a bank or by M-Pesa to the government paybill. Achekam records the payment with KRA's own reference, the PRN, and receipt, never generates a reference itself, refuses the discontinued paybill 572572, and needs a second person to confirm the payment. For a one-person business, that second person can be your accountant.
A simple monthly routine
- At month-end, total the gross income received or accrued.
- Take out any amount that already bore the levy as salary.
- Work out the levy at the current rate and post it.
- Generate the payment slip on iTax and pay by the ninth working day.
- Record the payment with its PRN and have it confirmed.
The levy sits alongside the other taxes a sole proprietor faces; taxes for sole proprietors puts them together.
Set up the account and the monthly reminder this week. The levy is small each month; it is the months that slip past that make it expensive.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
