Recent tax highlights; Employment Act (NHIF). | Audit and Accounting Firm in Kenya
Employment Act (NHIF)

The Finance Act, 2021 expanded the insurance relief provision to include NHIF contributions made by individuals. This has been in effect since 1st January, 2022.

  • Previously, NHIF has been treated as a deduction by accountants while preparing the monthly payroll.
  • While this is still a statutory deduction, it is now treated as a tax relief. This means, it reduces the PAYE that is payable to KRA.
  • In the long run, the taxpayer’s take home is expected to increase, dependent on the scale of your NHIF contributions.
  • In Kenya, insurance relief is granted at the rate of 15% of the qualifying premiums paid but capped to a maximum of Kshs. 5,000 per month or Kshs. 60,000 per year.
  • This provision is a welcome move to many individuals who make contributions to the National Health Insurance Fund. They will now enjoy a tax relief equal to 15% of their  NHIF contributions.

Comment (1)

  1. Jo
    February 7, 2022

    Does the relief apply across board to include voluntary contributions for the self employed?

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