Workers Receive a 15% Relief On Housing Levy
Under the revised ideas, employees would receive a 15 percent relief on housing levy contributions, increasing the total number of rebates available to four.
The additional relief was suggested in the 2024 Finance Bill and would somewhat lower the total amount of taxes owed by each employee.
A portion of the 2024 Finance Bill states, “The amount of affordable housing relief shall be 15 percent of the employee’s contribution but shall not exceed Sh108,000 per annum.”
This suggests that a worker who receives a gross wage of Sh50,000 per month and pays a housing levy of Sh750 will receive a relief of Sh112.50, which will help to partially offset their taxable income.
People who make Sh4 million or more a month are eligible for a relief of Sh9,000, which is the maximum amount permitted by the proposal, after paying a tax of Sh60,000. The housing charge was first paid for by employees last year, and employers matched their payments at the same rate.
The affordable housing tax must be paid by both the employer and the employee. It is calculated as 1.5 percent of the employee’s gross monthly wage and must be deposited within nine working days of the end of the month.
Employees are currently eligible for three types of tax reliefs. The personal relief, which aims to reduce taxes, is fixed at Sh2,400 per month or Sh28,800 yearly.
Additionally, employees are eligible for tax reduction on the contributions they make to the post-retirement medical fund, up to a maximum of Sh60,000 or 15 percent of the total amount contributed.
An employee who has paid insurance premiums for life, health, or education plans is also eligible for insurance relief, with a maximum annual benefit of Sh60,000, or 15% of premiums paid.
Insurance relief is also available at the same rate for contributions made to the National Health Insurance Fund, which is anticipated to be renamed the Social Health Insurance Fund.
The 2024 Affordable Housing Act established the affordable housing levy, which is intended to finance the construction of inexpensive housing as well as give access to it.
The Treasury anticipates collecting Sh54.6 billion from the levy in the fiscal year that ends in June and Sh63.2 billion in the subsequent cycle that begins on July 1st, based on the most recent budget estimates.
It is anticipated that Kenyans will pay between Sh840,000 and Sh5.76 million for the affordable housing initiative, which seeks to build 250,000 units annually.
One of the types of the State-backed buildings will consist of studios (bedsitters) and two- and three-bedroom apartments, which will make up the affordable housing units.
Meanwhile, the program’s lower tier of social housing, which is aimed at slum dwellers, will consist of one-, two-, and three-room dwellings. The initiative will also supervise the construction of units targeted at the market, including two- and three-bedroom homes.
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Workers Receive a 15% Relief On Housing Levy
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