On 7 September 2026, KRA issued a one-line reminder to every employer in Kenya: file and pay August PAYE on or before Wednesday 9 September. That reminder landed a few days after press reports that some employers could not upload their returns on iTax at all, with KRA telling affected taxpayers to be patient and, in the meantime, email completed returns to its contact centre. For an SME with one accountant and a payroll that closed on the 30th, that is a tight and uncomfortable week.
This guide explains exactly when PAYE is due, what the late filing and late payment penalties are and how they stack, what the Finance Act 2026 did and did not change for payroll, and the one habit that turns a small delay into a five-figure bill. Every rate quoted here was checked against at least two sources, but KRA remains the final word on your specific case.
Key takeaways
- PAYE for any month is due, filed and paid, by the 9th of the following month. August payroll is due by 9 September.
- Filing late costs the higher of 25 percent of the tax due or KSh 10,000. Paying late adds a 5 percent penalty plus interest of 1 percent a month on the balance.
- The Finance Act 2026 left PAYE bands and the KSh 2,400 personal relief untouched. The proposed KSh 30,000 tax-free threshold was dropped before the Bill passed.
- From January 2027 individuals must file annual returns by the end of April, not June, which means employers need P9 forms out earlier than they are used to.
When is PAYE due in Kenya?
Under the Income Tax Act, an employer deducts PAYE from each employee's pay and must account for it to KRA by the 9th day of the month after the payroll month. That single date covers two separate obligations: filing the monthly employer return on iTax and paying the amount declared. Doing one without the other still leaves you non-compliant. KRA's September notice, reported by People Daily, put it plainly: submit and make payment before or on the 9th.
There is no statutory grace period for weekends or public holidays. Payroll advisers such as AnooreHR recommend treating the 9th as a hard stop and paying earlier when it falls on a Saturday or Sunday, because bank and M-Pesa settlement times, not KRA's calendar, are what decide whether the money lands on time.
PAYE late filing penalty: 25 percent or KSh 10,000
If the return is not on iTax by the deadline, the penalty is whichever is higher of 25 percent of the tax that should have been declared or KSh 10,000. KRA's own offences and penalties page frames this as the penalty for failing to deduct or account for PAYE, and the same figures appear consistently in guidance from FaidiHR, Juma Auditors and other Kenyan payroll firms.
The floor is what catches small employers. A business whose entire monthly PAYE is KSh 4,000 still pays KSh 10,000 for a late return. A business remitting KSh 300,000 a month faces KSh 75,000 for the same mistake.
Late payment penalty and interest on unpaid PAYE
Filing on time but paying late triggers a different charge under the Tax Procedures Act: a one-off penalty of 5 percent of the unpaid tax, plus interest of 1 percent per month, or part of a month, until the balance is cleared. Juma Auditors and HelloDuty both describe the structure the same way. One tax calendar we reviewed quoted a higher monthly interest figure, so if you are computing exposure on an old debt, confirm the current rate on iTax before you rely on it.
Interest is the quiet cost. A KSh 150,000 PAYE bill left unpaid for six months accrues roughly KSh 9,000 in interest on top of the KSh 7,500 penalty, before any filing penalty.
Did the Finance Act 2026 change PAYE rates?
No. The Finance Bill 2026 was debated with a proposal to raise the tax-free threshold from KSh 24,000 to KSh 30,000 a month and cut the rate on the next band, but Treasury pulled it, citing the revenue it would cost, according to coverage from activpayroll and Workpay. The Act as assented in late June 2026 leaves the monthly PAYE bands where they have stood for the past few years: 10 percent on the first KSh 24,000, 25 percent to KSh 32,333, 30 percent to KSh 500,000, 32.5 percent to KSh 800,000 and 35 percent above that. Personal relief stays at KSh 2,400 a month, and employee NSSF, SHIF and Housing Levy contributions remain deductible before the bands are applied, as both AnooreHR and HelloDuty confirm in their 2026 guides.
Two changes do touch payroll. EY and PwC both note a new exemption for gratuity paid under contracts of at least three continuous years, provided the employer's contributions do not exceed 31 percent of the employee's pay over the contract, effective 1 July 2026. And from 1 January 2027 the individual return deadline moves from the end of June to the end of April, which shortens the window in which employees will be chasing you for P9 forms.
How to file the monthly PAYE return on iTax
Since 1 July 2025 KRA has required the simplified Excel-based PAYE return, which it says integrates with other government systems and handles PAYE and the Housing Levy in one submission. The workflow is: export the month's payroll into the KRA template, validate it offline, upload the zipped file on iTax under the P10 return, generate the payment slip, and pay through a bank or mobile money using that slip's reference. Keep the acknowledgement receipt and the payment confirmation together as proof for the month.
When iTax is unavailable, as it reportedly was for some employers in the first week of September, KRA's stated fallback was to send the completed return to callcentre@kra.go.ke. Do that, keep the sent email, and still pay by the 9th, because the payment obligation does not depend on the portal being up.
SHIF and Housing Levy fall due on the same day
PAYE is not the only remittance with a 9th-of-the-month deadline. Both FNJ Associates and HelloDuty list SHIF (2.75 percent of gross pay, minimum KSh 300) and the Affordable Housing Levy (1.5 percent from the employee, matched by the employer) as due on the 9th as well. NSSF has its own deadline under the NSSF Act and the sources we reviewed did not agree on it, so confirm the date on the NSSF employer portal. Each fund runs its own penalty regime, so a single late payroll cycle can generate three or four separate penalty letters.
The mistake that costs SMEs the most: waiting for the system
The most expensive habit we see is not sloppy arithmetic. It is the accountant who logs in on the 9th, finds iTax slow or the upload failing, and decides to try again tomorrow on the assumption that KRA will understand. KRA does not waive penalties for system slowness by default. A penalty waiver is a separate application that takes time and is not guaranteed.
Put numbers on it. A 25-person firm with monthly PAYE of KSh 220,000 files two days late and pays a week late. The filing penalty is 25 percent, or KSh 55,000, because that exceeds the KSh 10,000 floor. The late payment penalty is KSh 11,000. Interest for a part-month is KSh 2,200. That is KSh 68,200 gone for a delay of nine days, roughly the cost of a junior employee's monthly salary, and it will show up as an unpaid liability on the next tax compliance certificate application. The fix is procedural: close payroll by the 3rd, upload by the 5th, pay by the 7th, and treat the 9th as the day you are already done.
Frequently asked questions
What if the 9th falls on a weekend or public holiday?
The law does not move the date. Practitioners advise paying on the last working day before the 9th so the funds are visible to KRA in time. Payment slips generated on iTax carry the reference you need, so generate them before the weekend rather than on Monday morning.
Can I file a nil PAYE return if I had no employees this month?
Yes, and you should. An employer registered for PAYE who simply skips a month is treated as a non-filer and can attract the KSh 10,000 minimum penalty even though no tax was due. A nil return on iTax takes a few minutes and closes the month cleanly.
How do I know the PAYE figure I am filing is right?
Reconcile three numbers before you upload: total PAYE on the payroll register, total PAYE on the sum of payslips, and total PAYE in the KRA template. If they match, the return is internally consistent. With a system like Force HRM that generates the KRA file from the same records that produced the payslips, the reconciliation is automatic.
Make the 9th a non-event
Every penalty in this article is avoidable, and the cure is the same in each case: a payroll process that produces the statutory files, the payment references and the audit trail on the same day the payslips go out. Force HRM is built for Kenyan SMEs with exactly that in mind: mobile-first, compliant with PAYE, SHIF, NSSF and the Housing Levy out of the box, and operable through AI assistants via MCP. Run PAYE-compliant payroll before the 9th with Force HRM.
