Glossary term
PAYE (Pay As You Earn)
PAYE (Pay As You Earn) is the income tax an employer deducts from a worker's pay and sends to the Kenya Revenue Authority. It is calculated on taxable pay using graduated bands.
PAYE is the tax on a fundi's wages, collected at source. The employer takes it out of each payslip and sends it to KRA, so the worker never has to file a return just to settle employment tax.
Updated October 17, 2026 · Glossary
How PAYE is calculated
PAYE is applied to taxable pay using graduated bands. Every employee also receives a monthly personal relief of KES 2,400, which reduces the tax payable.
- 10% on the first KES 24,000
- 25% from KES 24,001 to 32,333
- 30% from KES 32,334 to 500,000
- 32.5% from KES 500,001 to 800,000
- 35% above KES 800,000
Why site workers still fall in the net
It is a common myth that casual fundis are not taxed. Once monthly pay passes the tax-free threshold, PAYE applies and the employer must deduct and remit it. For a worker on daily wages, the taxable amount is the total earned in the month.
The employer's duty
Deduct PAYE each month, give the worker a payslip showing the deduction, and file the return with KRA by the 9th of the following month. An accurate muster roll and payslip make the return easy to reconcile.
Frequently asked questions
Do casual construction workers pay PAYE?
Yes, once their monthly pay exceeds the tax-free threshold. The employer deducts it from wages and remits it to KRA; casual status does not remove the tax.
What is the monthly personal relief?
Every employee receives a personal relief of KES 2,400 a month, which reduces the PAYE payable. It is applied automatically in a correct payroll calculation.
When is PAYE due?
PAYE is filed and paid by the 9th of the month following the payroll month. Late returns attract penalties and interest, so keep the payslips and muster roll ready.
Keep reading
Guides
PAYE for Construction Workers
How PAYE works for Kenyan construction crews — tax bands, personal relief, casual daily wages, and the mistakes that trip up site payrolls.
Product
Automated Statutory Deductions
FundiPay calculates PAYE, NSSF, SHIF and the Affordable Housing Levy per worker and prepares the returns, keeping site payroll compliant.
Guides
Payroll Statutory Calendar
The monthly construction payroll calendar in Kenya: PAYE, NSSF, SHIF and housing levy returns due by the 9th, what to prepare and the cost of lateness.