Affordable Housing Levy Guide
The affordable housing levy adds a second shilling to the statutory deductions on a construction payroll, and unlike PAYE or NSSF it is charged twice — once from the employee and once, separately, from the employer. For a contractor paying a large casual crew, that employer half is a real cost, and underestimating it is one of the fastest ways to blow a labour budget. This guide explains how the levy is calculated, who it applies to and how to remit it without penalties.
Updated October 17, 2026 · Guides
How the levy works: 1.5% plus 1.5%
The affordable housing levy is charged at 1.5% of gross monthly salary, deducted from the employee, and matched by a further 1.5% of gross paid by the employer. The employee's share comes out of wages; the employer's share is an additional cost to the business. On a construction site this means the true labour cost of every fundi is higher than the wage you negotiated — budget for the employer half from the start, not after the first return.
- Employee share — 1.5% of gross monthly salary, deducted from wages.
- Employer share — a further 1.5% of gross, paid by the business on top of the wage.
- Calculated on gross pay, before PAYE and other deductions.
Who it applies to on a construction site
The levy applies to employees on the payroll, and construction crews are squarely within scope. Regular fundis, site supervisors and office staff are all employees for this purpose. The trap is treating a long-serving casual as if the levy does not apply because they are paid by the day — daily pay does not change the obligation. If a worker is on your payroll, both shares should be accounted for. If in doubt, ask the simpler question: is this person on my payroll? If yes, the levy applies.
Calculating it on construction payroll
Because the levy is a percentage of gross, it moves with every pay run, which makes it a poor fit for a fixed monthly deduction. Casual wages change with attendance and overtime, so both the employee's 1.5% and the employer's 1.5% must be recalculated per worker from that run's actual gross. FundiPay computes both shares automatically as payroll runs, shows the employee deduction on the digital payslip, and produces the figures for the monthly return. The employee share also appears on the payslip, which matters because a worker who sees a deduction they did not expect will ask about it.
Avoiding penalties
The levy is remitted monthly, with the return due by the 9th of the following month alongside the other statutory deductions. Penalties come from three habits: deducting the employee share but not paying the employer share, using a stale figure for a crew whose wages moved, and filing late. None of these require tax expertise to fix — they require the levy to be calculated from the same payroll that paid the wages, and remitted on time.
Frequently asked questions
What is the affordable housing levy rate?
The levy is 1.5% of gross monthly salary deducted from the employee, plus a matching 1.5% of gross paid by the employer. It is calculated on gross pay, before PAYE and other deductions.
Does the employer pay the housing levy as well as the employee?
Yes. The employee contributes 1.5% from wages, and the employer pays a further 1.5% from its own funds. The employer share is a real additional labour cost and should be budgeted from the start of the project.
Does the levy apply to casual construction workers?
Yes, for workers on your payroll. Being paid by the day does not exempt a worker. If they are on the payroll, account for both the employee and employer shares.
When is the housing levy due?
It is remitted monthly, with the return due by the 9th of the following month. File on time and make sure the employee share deducted matches the amount remitted to avoid penalties.
Keep reading
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
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.
Glossary
Affordable Housing Levy
A Kenyan statutory levy of 1.5% of gross monthly pay, matched by the employer, that funds the affordable housing programme.
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.