Housing levy defaulters face KRA crackdown: How your bank account and PIN could be affected

Kenyans who fail to remit the Affordable Housing Levy could face the same recovery measures used by the Kenya Revenue Authority (KRA) against ordinary tax defaulters, following changes introduced through the Finance Act, 2026.

The changes do not increase the basic Affordable Housing Levy rate but instead give KRA a clearer statutory route to recover unpaid levies by allowing amounts owed under other laws to be pursued using mechanisms available for unpaid taxes.

The Affordable Housing Act, 2024, imposes the levy at 1.5 per cent of an employee's gross salary, or 1.5 per cent of gross income for income not already subject to the levy through employment. The law further designates the KRA Commissioner-General as the collector.

For employees, employers are required to deduct the employee's contribution and remit an equivalent amount themselves.

The law requires the levy to be remitted by the ninth working day after the end of the month in which the salary was due or the gross income was received or accrued.

The Finance Act, 2026, which was assented to on June 23, introduced Section 39B into the Tax Procedures Act.

The provision allows KRA to use its tax-recovery machinery when collecting a fee, levy or charge that it has been designated to collect under another written law.

In addition, the new section states that where the Commissioner is the collector of a fee, levy or charge, the Commissioner may “recover any unpaid amount ... as if it were unpaid tax.”

That distinction is important because the Affordable Housing Levy is created under the Affordable Housing Act, while the Tax Procedures Act provides the machinery KRA uses to enforce tax debts.

With the new provision, an unpaid housing levy can therefore enter the same recovery framework as other amounts KRA collects.

The Tax Procedures Act contains several tools for recovering unpaid amounts. One of the most consequential is the ability to issue a garnishee order, through which a third party holding money for a taxpayer—such as a bank—can be directed to surrender funds towards an outstanding liability.

This means that where a housing levy debt has been established and remains unpaid, the recovery process can ultimately reach money held in a bank account.

KRA's enforcement powers can also affect a taxpayer's PIN. PIN deactivation can interfere with transactions and services that require an active KRA PIN, including obtaining a tax compliance certificate.

The recovery framework can further involve action against assets belonging to a debtor, depending on the circumstances and the statutory procedures applicable to the recovery.

The law also provides a simplified route for smaller debts. Section 39B specifically provides that where an unpaid fee, levy or charge “does not exceed one hundred thousand shillings it shall be recoverable summarily.”

The obligation extends beyond salaried employees whose contributions are normally handled through payroll.

Also, the Affordable Housing Act covers gross income that is not already subject to the levy through employment.

The law further provides that a person whose levy is being paid through employment under Section 5 is not liable to pay the levy again on other gross income under the alternative provision.

This places businesses and other income earners outside conventional payroll systems within the compliance framework.

Employers also have a separate responsibility. Where an employer deducts the employee's contribution but fails to remit it together with the employer's matching contribution, the unpaid amount can become a liability requiring recovery.

The government's push to enforce compliance among businesses outside the formal payroll system had already been signalled before the latest legal changes.

In February 2025, then acting Affordable Housing Board CEO Sheila Waweru said contributions from the informal sector were coming in slowly and warned that enforcement would follow where businesses failed to accurately declare their income and employees.

The Finance Act changes have now provided KRA with a broader statutory recovery mechanism.

The Affordable Housing Act itself already provides for a 3 per cent monthly penalty on an unpaid levy, calculated at 3 per cent of the unpaid amount for each month or part of a month it remains outstanding.