Kenyan law exempts part of the income of a person with a disability from income tax. For many people the exemption removes PAYE altogether, yet a lot of eligible people never claim it because they do not know how to start. This guide explains the basics and the steps.

What the exemption is

A person with a disability who has been certified by the National Council for Persons with Disabilities (NCPWD) is exempt from income tax on up to KES 150,000 of monthly income, which is KES 1.8 million a year. The exemption applies to employment income and to business income, and for an employee it means PAYE is charged only on pay above the exemption. Parents or guardians of a person with a disability may have rules of their own; ask KRA.

Who qualifies

  • You must have a disability recognised under the Persons with Disabilities Act.
  • You must hold a valid NCPWD registration or certificate.
  • You must be a resident taxpayer with a KRA PIN.

How much it saves

Say you earn KES 120,000 a month. Without the exemption, PAYE would be about KES 19,000 after personal relief and the statutory deductions. With the exemption, taxable income is zero and PAYE is nil. At KES 200,000, only the KES 50,000 above the exemption is taxed. Use the disability exemption checker to see the saving for your own pay.

How to apply

  1. Get certified. Register with NCPWD and obtain the certificate that confirms your disability.
  2. Apply to KRA. Log in to iTax and apply for the exemption, uploading the NCPWD certificate. KRA issues an exemption certificate once it is satisfied.
  3. Give the certificate to your employer, who applies the exemption to your pay from the next payroll. If you are self-employed, quote it when you file.

Follow KRA's current iTax procedure, because the screens and requirements change. See how to register on iTax if you have not set up your account.

What your payslip should show

PAYE should fall to nil or to the tax on the pay above the exemption. NSSF, SHIF and the Housing Levy are still charged, because they are not income tax. Check the figures with the PAYE calculator and read how to read your payslip to confirm each line.

If your employer did not apply it

Claim the refund when you file your annual return, with the exemption certificate attached. Your P9 shows what was already deducted; see filing your employment return with a P9. Do not leave it too long, because there are time limits for claiming refunds.

For employers

Keep a copy of the exemption certificate on file and update payroll as soon as you receive it. The employee records register and contract tracker has a place for it, and the monthly payroll workbook lets you adjust taxable pay for an employee. See how to run payroll for the monthly routine.

Other support

Other reliefs can apply as well, such as insurance relief; see how to claim insurance relief.

The exemption rules and amount are set by law. Confirm the current figure and the application steps with KRA and NCPWD.