The moment you hire your first employee you take on a set of monthly obligations. Miss one and the penalties come quickly. This checklist lists what an employer must register for, pay and file, with the deadlines to put in your diary. Rates and thresholds are shown for illustration and come from the rates table, so check them before you run payroll.
Register first
Before the first payday, make sure the business has:
- A KRA PIN and the PAYE obligation on iTax. See how to register on iTax.
- An NSSF employer number and each employee registered.
- Registration with the Social Health Authority (SHA) for SHIF contributions.
- Registration for the Affordable Housing Levy, which is remitted through KRA.
- Each employee's KRA PIN, ID and NSSF number on file.
New hires are easier to onboard with a checklist: the new employee onboarding checklist covers the documents and registrations.
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Each month: the payments
| Payment | Who bears it | Rate or basis | Due |
|---|---|---|---|
| PAYE | Employee, withheld by employer | Progressive bands on taxable pay | 9th of the next month |
| NSSF | Employee and employer, equal shares | Tiered contributions on pensionable pay | 15th of the next month |
| SHIF | Employee | 2.75% of gross pay, with a minimum | 9th of the next month |
| Housing levy | Employee and employer | 1.5% each of gross pay | 9th of the next month |
PAYE, SHIF deductions and the levy are calculated on each payslip. Use the PAYE calculator, NSSF calculator, SHIF calculator and housing levy calculator to check them. The explanations are in NSSF contributions explained, SHIF contributions explained and affordable housing levy explained. Note the order of calculation: NSSF, SHIF and the levy are deducted before PAYE is worked out, as described in housing levy and SHIF now deductible before PAYE.
Other regular items
- NITA levy. Employers pay a small monthly levy per employee to the National Industrial Training Authority. Check the current amount and the deadline on the NITA website.
- Work injury insurance. Employers must insure employees against work injuries under the Work Injury Benefits Act.
- Minimum wage. Pay at least the applicable wage order: how to check the minimum wage for your job.
- Payslips. Give every employee a payslip each month showing the gross pay and each deduction. The payslip generator produces one.
Each year
- File the employer's annual return and give each employee a P9 after the year ends, as early in January as you can. Employees need it for their own returns: filing your employment return with a P9.
- Reconcile payroll to the amounts paid, using the annual PAYE and payroll summary.
- Review leave balances and contracts.
Penalties
Late PAYE and housing levy carry a penalty and monthly interest. NSSF and SHIF have their own late-payment charges. Employers who deduct and do not remit also face prosecution, and employees lose credit for the tax. See KRA penalties and interest explained and test a late payment with the KRA penalty calculator.
A simple monthly routine
- Collect hours, leave and changes by the 25th.
- Run payroll and approve it.
- Pay salaries.
- File PAYE and levy returns and pay by the 9th.
- Pay SHIF by the 9th and NSSF by the 15th.
- File the receipts in the month's folder, and update the statutory remittance tracker.
Set reminders for each date, and for staff payments dated on weekends, pay on the previous working day. A fuller list is in the KRA filing calendar for small businesses. If you are new to payroll, read how to run payroll for a small business.
Starting payroll for the first time
A new employer should run a trial payroll before the first real payday. Enter each employee's gross pay, compute the statutory deductions and the net, compare with the calculators, and check that the totals match what you will pay to KRA, NSSF and SHA. Then file the first PAYE return as early as possible, so you learn the portal before the deadline pressure. Keep a signed employment letter for each person, and ask for their ID, PIN and NSSF numbers on day one. For smaller teams, a simple annual summary such as the annual PAYE and payroll summary shows year-to-date totals and helps you reconcile with your P9 forms. Finally, agree who covers payroll when the person responsible is away, because the deadlines do not move.
Frequently asked questions
Do I deduct PAYE for every employee? Only where the taxable pay is above the level that personal relief cancels. You still file the return, even when the PAYE is nil.
What if an employee has no KRA PIN? Ask them to get one. Without it you cannot file their PAYE correctly, and they lose credit for the tax.
Can I pay NSSF and PAYE together? No. They go to different bodies with different dates and reference numbers.
Are directors' salaries subject to the same deductions? Yes, where a director is an employee paid a salary. Dividends are treated separately.