The Affordable Housing Programme (AHP) has been in the list of president Uhuru’s Big 4 Agenda. The said programme seeks to provide affordable housing for Kenyans in the low and middle income segment.The programme launched in January, 2019 seeks to roll out 500,000 units by 2022 to try and plug the housing gap in the country.
To spur uptake and interest in the programme, the Government of Kenya through an amendment to Finance Act 2019 and the schedules therein has provided a tax relief to employees that will allow them a tax relief of 15% of gross contributions capped to KSh. 108,000 per year or KSh. 9,000 per month of their income. Employers will be allowed to reduce their employees’ Pay As You Earn (PAYE) payable by 15% of the gross contributions to the Affordable Housing Scheme and this relief will be termed as Affordable Housing Relief. For instance, a person earning Kshs. 90,000 a month is currently liable to pay KRA Kshs. 20,740 but under the housing incentive plan, their income tax would reduce to Ksh11, 740.
The Kenya Revenue Authority (KRA) will be required to issue details on tax relief to employers. Technically, saving into the housing fund has become voluntary as only workers who will have registered for the programme will enjoy the relief.
Initial plans to force employers to deduct the equivalent of 1.5 per cent of workers’ pay to the housing fund mandatorily were dashed by the courts which ruled that the proposal was illegal.
By Eugene Sudi