Kenyan payroll liabilities at year end

Which Kenyan payroll deductions and employer contributions are usually unpaid at year end, how to agree them, and how to show them in the statements.

By Achekam · 11 October 2026 · 5 min read · For Accountants & audit firms in Kenya

Every Kenyan employer that pays salaries at the end of the month closes its financial year owing money to someone. The staff have been paid, but the tax and contributions deducted from their pay, and the employer's own contributions on top, are not due until the following month. On the year-end balance sheet, that gap is a liability.

The amounts are rarely controversial. The errors are in the detail: a single "payroll control" account that nobody can analyse, last year's balances never cleared, a levy forgotten entirely. This article helps a firm work out what should be outstanding at a client's year-end, agree it, and present it properly.

Why the last month is always unpaid

The due dates do the work. At the time of writing:

• PAYE. KRA says employers must remit PAYE deducted, and file the PAYE return on iTax, on or before the 9th day of the following month, and must file a nil return if there is no PAYE to declare. KRA's guide to PAYE explains how employers deduct the tax from employees' pay and remit it.
• NSSF. NSSF says employers must pay contributions for each month on or before the 9th day of the following month, and that payments made after the 9th attract penalties.
• Affordable Housing Levy. Under section 4(3) of the Affordable Housing Act, the levy is payable to the collector not later than the ninth working day after the end of the month in which the gross salary was due. KRA is the collector, according to its notice of 21/03/2024.

For SHIF and the NITA levy, confirm the current due dates with the Social Health Authority and NITA respectively before the year-end work starts.

A worked example in words

Take a client with a 31 December year end that pays staff on the last working day of each month. December's salaries are paid in December. The PAYE deducted from them is due to KRA by the 9th of January. The NSSF contributions for December are due by the 9th of January. The Housing Levy is due by the ninth working day of January. At 31 December, none of these has been paid, and none should have been. All of them belong in the year-end liabilities.

If any of those balances is larger than one month's amount, something from earlier in the year is still unpaid, and late payment may already be attracting penalties.

Whose money each one is

The balances fall into two groups, and it helps the client to see the difference:

Amounts deducted from employees are not the employer's money at all; it is holding them for someone else. Amounts the employer contributes are part of its staff costs. Both are owed at year-end, but they reach the income statement differently, which matters for the staff costs note.

One liability account per contribution

The cleanest records keep a separate liability account for each contribution. That way, the year-end balance on each one can be compared directly with the final month's schedule, and anything left over stands out.

Achekam's Kenyan payroll is set up this way. It runs payroll with PAYE, the Affordable Housing Levy, SHIF, NSSF Tier I and II and the NITA levy, and each contribution posts to its own liability account, for example "PAYE and Housing Levy Payable (KRA)". It prepares the P10, SHIF, NSSF and NITA schedules and each employee's P9A card, for a person to file.

Two limits apply. Payroll for a Kenyan employer stays off until the firm confirms the shipped table. And NSSF Tier II contracting-out, where an employer has moved Tier II to an approved scheme, is not modelled, so a client that has contracted out needs that part handled outside the standard calculation. The monthly return that feeds the PAYE balance is explained in the P10 monthly PAYE return.

Agreeing the balances to the final month

At year-end, take each liability account and agree it to the documents for the last month:

1. PAYE. Compare the balance with the PAYE on the final month's P10 return.
2. Housing Levy. Compare with the final month's levy as declared to KRA, employee and employer shares together.
3. NSSF. Compare with the final month's NSSF schedule, both shares.
4. SHIF. Compare with the final month's SHIF schedule.
5. NITA. Compare with the NITA schedule for the period.
6. Check after the year end. Confirm each amount was paid in the following month, using the payment slip or bank statement. A payment that cleared the balance is the best evidence it was right.
7. Investigate anything older. A balance from earlier months means a payment was missed or posted to the wrong account.

Presenting them in the statements

Investopedia, explaining accrued expenses, notes that they are shown on the balance sheet as current liabilities because they are obligations to make future cash payments. Unpaid payroll deductions and contributions fit that description: each is a payment the client must make within weeks of the year end.

In the statements:

• show the payroll liabilities within current liabilities, either as their own line or within accruals and other payables with a note analysis;
• in the note, analyse the total by contribution so a reader can see what is owed to KRA, NSSF and the others;
• keep employee deductions and employer contributions distinct in the working papers, even if they are combined in the note; and
• make sure the employer's contributions are included in staff costs for the year. The link between payroll and that note is covered in the staff costs note from payroll.

A year-end routine for payroll balances

Ask the client for the final month's P10, NSSF, SHIF and NITA schedules and the payment evidence for the month after the year end before fieldwork starts. With those five documents and a separate account for each contribution, the payroll liabilities become one of the more straightforward areas of the year-end file.

General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.