PAYE, SHIF & NSSF: the payroll deductions Kenyan schools must get right

By Jaydee Innovation Hub · 7 min read

Running a school payroll in Kenya means more than paying salaries. Every month you must deduct and remit the right statutory amounts — and getting them wrong invites penalties and unhappy staff. Here is a plain-English guide to the deductions that matter, and how to keep them correct.

PAYE (income tax)

PAYE is the income tax deducted from each employee's pay and remitted to KRA. It is calculated on a graduated scale with personal relief, and it must reflect each employee's taxable pay for the month. Because the bands and reliefs are set by KRA and can change, your payroll should always apply the current rates rather than a figure typed in once and forgotten.

SHIF (health)

SHIF — the Social Health Insurance Fund — replaced NHIF as Kenya's statutory health contribution. It is deducted from staff pay and remitted on schedule. Schools that used to budget for NHIF need to make sure their payroll now calculates and reports SHIF correctly.

NSSF (pension)

NSSF is the national pension contribution, split between employee and employer portions across tiers. The contribution structure has changed in recent years, so it is easy to under- or over-deduct if you are working from an old template. Your system should compute both the employee and employer share automatically.

The Housing Levy

The Affordable Housing Levy is a further statutory deduction on gross pay, matched by an employer contribution. Like the others, it must be remitted on time, and it should appear clearly on each payslip so staff can see where their money goes.

P9A, P10 and filing

At year-end, each employee needs a P9A summarising their pay and PAYE, and you file a P10 return. If your payroll has recorded everything correctly through the year, these are a one-click export — not a scramble through spreadsheets.

How Elimu SMS handles it

Elimu SMS payroll computes PAYE, SHIF, NSSF and the Housing Levy for every employee using current rates, generates payslips and a bank EFT file, and produces P9A and P10 outputs when you need them. Because payroll shares one record with staff onboarding, there is no double entry — and it all runs on your own school server. See the school payroll software page for detail.