PAYE reliefs and exemptions
Pension, mortgage interest, private medical insurance, PWD exemption and the wholly PAYE-exempt flag — what they do and where to enter them.
Beyond the universal personal relief of KES 2,400/month every resident gets, four employee-specific reliefs can reduce PAYE further. All of them are configured on the employee's Tax & Reliefs tab; the calculator applies the statutory caps automatically.
Pension contribution relief
Monthly contributions to a registered pension scheme are deductible from gross before PAYE. The Finance Act 2024 raised the cap from KES 20,000 to KES 30,000.
- Cap: min(actual contribution, 30% of pensionable pay, KES 30,000).
- Vendly applies all three constraints automatically — admins enter the raw monthly contribution.
- The contribution is also a cash deduction from take-home (the money goes to the scheme).
Mortgage interest relief
Interest paid on a loan secured against an owner-occupied residential property, capped at KES 30,000 per month (KES 360,000 per year).
Mortgage relief reduces taxable income but is NOT a payroll deduction — the employee pays the bank externally. Take-home goes UP slightly because PAYE goes down.
Private medical / life insurance relief
15% of premiums paid by the employee on private medical or life insurance, capped at KES 5,000 per month. SHIF was removed from this relief on 27 December 2024 — only genuine private insurance qualifies now.
Persons-with-Disability (PWD) exemption
Employees holding a KRA-issued income-tax exemption certificate for PWD receive a tax-free band of KES 150,000 per month before any PAYE band applies.
- Toggle 'PWD Income-Tax Exemption' on the Tax & Reliefs tab.
- Record the KRA-issued certificate number in the reveal field that follows.
- Statutory contributions (NSSF / SHIF / AHL) still apply — only PAYE is reduced.
Wholly PAYE-exempt employees
Some employees are exempt from PAYE entirely — Special Economic Zone (SEZ) workers, diplomatic staff, and anyone with a KRA-issued income-tax exemption certificate that's not specifically for disability. Use the separate 'Wholly PAYE-Exempt' switch on the same tab; when on, PAYE is forced to zero regardless of band.
Don't confuse this with the PWD exemption. Wholly PAYE-exempt = no income tax at all. PWD = first KES 150,000 tax-free. Use the right switch.
Where to enter all of these
Open the employee profile
EmployeesSwitch to the Tax & Reliefs tab
Three monthly cash inputs (pension, mortgage, private medical) with KRA cap captions, plus two switch panels for the disability and PAYE-exempt cases. Save — the next payroll run picks them up.
Kenya law that applies
- Income Tax Act, Cap 470
Primary statute for PAYE, allowable deductions, reliefs and benefit-in-kind valuation.
- Finance Act 2024
Raised the pension contribution relief cap from KES 20,000 to KES 30,000 per month.
- Tax Laws (Amendment) Act 2024
Made SHIF and AHL allowable pre-PAYE deductions; repealed the 15% SHIF insurance relief from 27 December 2024.