The day you pay an employee above the tax-free threshold, you become responsible for deducting PAYE and paying it to KRA. Even if no tax is due in a month, you must file a PAYE return. This guide shows how to register for PAYE and file monthly returns, step by step, with the data you need.
Before you start
You need:
- A KRA PIN for the business or yourself as the employer, with an active iTax account
- Each employee's KRA PIN, name, ID number and monthly gross pay and benefits
- The amounts of NSSF, SHIF and housing levy deducted
- The PAYE you calculated for each employee
Use the PAYE calculator and the payslip generator to compute the amounts. If you are a new employer, read hiring your first employee and the employer obligations checklist.
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Step 1: add the PAYE obligation
- Log in to iTax: how to register on iTax.
- Choose to add tax obligation (under the registration menu).
- Select PAYE and enter the effective date, which should be the date of the first payroll.
- Fill in the employer details and submit.
- Wait for approval, then check that PAYE shows on your profile.
Step 2: prepare the return data
KRA provides an Excel return template for PAYE with a sheet for employee details and amounts, often called the P10 template. For each employee it asks for:
- PIN and name
- Residential status
- Type of employee (primary or secondary)
- Basic salary, allowances, benefits and the total gross pay
- NSSF, SHIF and housing levy
- Taxable pay and PAYE
- Personal relief and insurance relief
Fill in one row per employee. Check that the PINs are correct, since an invalid PIN is the most common reason a file fails to upload. The monthly payroll workbook and payroll run checklist help gather the numbers.
Step 3: upload the return
- Go to the returns menu and choose file return, then PAYE.
- Select the period (month and year).
- Download the template if you do not have it, fill it in and save as instructed.
- Upload it. The system validates the file and shows errors, if any.
- Fix errors and re-upload.
- Submit the return. A payment slip with the PRN is generated for the PAYE due.
Also file the housing levy return as required. File a nil return in months with no PAYE: nil returns explained.
Step 4: pay
Pay the PRN by M-Pesa, bank or other channel by the 9th of the next month: how to pay KRA taxes with M-Pesa, bank and a PRN. Confirm that the payment is posted. NSSF and SHIF are paid to their own bodies and not through the PAYE slip.
Common upload errors
| Error | Likely cause |
|---|---|
| Invalid PIN | Typing errors, wrong PIN, or an employee not registered |
| Totals do not match | Taxable pay minus relief and tax is wrong in a row |
| Wrong period | The template's period does not match the one selected |
| File format | Template modified, extra columns or the wrong file type |
| Duplicate employee | The same employee entered twice |
If an employee has no PIN yet, they should register for one. Until then, you cannot claim the tax for them properly.
After filing
- Give each employee a payslip every month.
- At year-end, produce P9 forms and file the annual employer return: filing your employment return with a P9.
- Reconcile payroll to the returns with the annual PAYE and payroll summary.
- Record dates and amounts in the statutory remittance tracker.
Late or wrong returns
A late PAYE return costs the higher of 25 percent of the tax or KES 10,000, plus late payment penalty and interest, according to the table in penalty and interest rates. Test it with the KRA penalty calculator. If you find an error, submit an amended return rather than waiting for an audit.
Tips
Run payroll early enough to file before the 9th. Keep the template for each month. Have a backup person who can file. Check the statutory deductions with the NSSF calculator and housing levy calculator.
Frequently asked questions
Do I file PAYE if my employee earns below the taxable threshold? Yes. You still file a return for each month with the employee shown, even if the PAYE is nil.
Can I file for several months at once? Each month has its own return, but you can file back-to-back when catching up. Penalties continue to apply to the late months.
What if I pay an employee in cash? PAYE is calculated the same way. Keep a signed pay record.
Who is responsible if the accountant files late? The employer remains liable. Agree deadlines in writing with your accountant.