How August Payslip Will Be Impacted By House Levy With Arrears
Teachers, government employees, and other workers may see a decrease in their August paychecks as a result of the government’s planned implementation of a double deduction of the required housing levy.
By publishing a public notice that retroactively dates the levy to July 1, the Ministry of Lands, Public Works, Housing, and Urban Development has taken a bold step.
Employees must contribute 1.5% of their monthly gross wage to the contentious affordable housing levy, and their employers must match that amount.
As companies prepare to implement the required deductions, the backdating of the contributions means that employees’ compensation will be reduced by 3%.
According to the Finance Act 2023, “the levy is payable by the employee and employer at a rate of one and five percent of the employee’s gross monthly salary by the employee and one and five percent of the employee’s gross monthly salary by the employer.”
As a result, businesses will be compelled to match the 3% that employees are expected to donate from their paychecks to cover the months of July and August.
At the end of August, a worker with a monthly gross salary of Sh50,000 will have lost Sh1,500 due to the housing levy.
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The cost for July and August will be Sh3,000 for those making Sh100,000.
A total of Sh6,000 will be lost by those making a monthly gross salary of Sh200,000 to cover the two months.
According to the administration, the fee will be utilised to construct affordable housing for those with low incomes.
Following a significant public outcry, the government lowered the monthly housing fee for employees from 3% to 1.5%.
“We are alive if we experience the pain of the three percent. Seven million Kenyans live in slums and are among the millions of young people looking for work. If we share their agony, then we are human, stated Ruto on June 7.
The fee was changed into a tax, which will now be collected alongside other levies by the Kenya Revenue Authority.
Additionally, contrary to what was initially planned before the law was approved by Parliament, employees would not be able to transfer their payments to their spouse or children.
After seven years, they will be able to pay out their contributions.
According to the legislation, an employer must lay aside each employee’s monthly payment no later than nine working days following the end of the month for which the payments are due.
Both the employee’s and the employer’s payments are included in the total.
Employers who violate the housing levy clause are subject to penalties equal to 2% of the outstanding amounts for each month that the unpaid amount is not received.
How August Payslip Will Be Impacted By House Levy With Arrears
