The Finance Act 2021 was signed into law by the President on June 29th, 2021 and thereafter gazzetted on 1st July, 2021. The Act introduced a number of changes aimed at cushioning Kenyans against the harsh effects of the COVID-19 pandemic on the economy.

One of the changes to note is that the Act has now extended insurance relief on PAYE to include National Health Insurance Fund (NHIF) contributions w.e.f 1st January 2022. The amount of Insurance relief to be claimed is equivalent to 15% of the premiums paid with a cap of Kshs. 5,000 per month. Previously only policy holders of education, life and health insurance could enjoy this relief.

By allowing a tax relief on the NHIF contributions, individuals will enjoy a maximum relief KES 255 per month (being 15% of KES 1,700 which is the maximum monthly NHIF contribution) which will result in a higher net pay for employees.

Although minimal, the relief is bound to encourage more NHIF remittances while simultaneously aiding the government in attaining its Universal Health Coverage (‘UHC”) agenda as stipulated in the Big 4 Agenda.

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