Employment Tax in Kenya

1. Home Ownership Savings Plan (HOSP) (s.5()())
   An employee is elligible for a deduction upto a maximum Kshs. 4,000 per month (Kshs. 48,000 per annum) for :-
   
   
   
   • funds deposited by the employer in a "Registered Home Ownership Plan" (HOSP)
   • to an approved institutions. registered by the Commissioner and
   • the employee does not own interest in a permanent house
   
   Further interest earned on deposits upto 3 million shall be exempt from tax.
2. Mortgage Relief (s.5(3)(b))
   Interest paid on an amount borrowed from specified financial institutions to finance either :-
   
   
   
   • the purchase of premises or
   • improvement of premises
   occupied for residential purposes is deductible against employment income up to a maximum of kshs. 300,000/- per annum from Jan 2017. Previously the allowable was kshs. 150,000/-. Only one residence qualifies per person.
   
   The specified financial insitutions are the first four(4) listed under the Fourth Schedule as follows :-
   
   
   
   • a bank registered under the banking Act
   • an isurance Company licenced under the insurance Act
   • a building society registered under the building societies Act
   • The National Housing Corporation
3. Exempt Income
   Effective 1st July 2016, an employee whose marginal rate of tax, on the basic salary, is at 10% band will not be taxable on the following additional income -
   
   
   • Overtime, and or;
   • bonuses, and or;
   • retirement benefits.
4. Group Insurance Cover s.5(2)(f)(ii)
   Premiums paid by the employer for group life policy are not taxable benefits on the employee unless it confers a benefit to the employee or any of his dependants.