PAY AS YOU EARN (PAYE) TAX BRACKET

Pay As You Earn is a method of tax collection from employees, both resident and non-resident, in any gainful employment.

These earnings include salaries, casual wages, leave payout, sick pay, payment in lieu of leave, commissions, bonuses, gratuity, travelling, entertainment or other allowances received in respect of employment or services rendered to a company. PAYE is chargeable to those employees who earn income of KES 24,000 and above per month.

This means that any individual with a taxable income of up to KES 24,000 per month will not have any income tax liability. This is a positive measure to cushion those employees with very low incomes.

As Virtual Human Resources Services Limited, we ensure that PAYE deducted from all employees’ salaries at the prevailing tax rates, are remitted to KRA on or before the 9^th of the following month.

Additionally, we always ensure strict adherence to PAYE filing and payment to avoid our clients from incurring any penalties/fines which is charged on the employer.

HOW IS PAYE CALCULATED?

The following individual tax bands and rates are applicable to individual employment income which we use to compute employees’ salaries. These PAYE tax brackets came into effect from 1st January 2021 following the Tax Laws Amendment (No.2) Act, 2020.

PAYE is computed as per below new tax bands:

Tax Bands	Annual	Monthly	Rates
On the first	KES 288,000	KES 24,000	10%
On the next	KES 100,000	KES 8,333	25%
On all income in excess of	KES 388,000	KES 32,332	30%
Personal relief of KES 28,800 per annum (KES 2,400 per month) is applicable