September 25, 2024
Posted by: adminatWM
Category: HRM, Payroll, Support

Payroll & HR guide for Kenyan employers

NHIF to SHIF Transition in Kenya: Stay Compliant and Avoid SHA Penalties

SHIF replaced NHIF on 1 October 2024. Employers now deduct 2.75% of gross salary, with a KES 300 minimum and no upper cap, and remit it to the Social Health Authority (SHA) by the 9th. Here is exactly what to change in your payroll. This NHIF to SHIF Transition guide explains the contribution rate, employer responsibilities and payroll updates.

Automate Your SHIF Compliance See the 4 steps

NHIF to SHIF Transition — A visual overview of the changes Kenyan employers need to understand.

Late or wrong SHIF deductions cost you money, and your staff their cover

SHA penalty: 2% of the outstanding amount for every month the payment is unpaid.
Staff lose access: employees with outstanding contributions are not eligible for SHIF healthcare services until the dues are settled.
KRA exposure: SHIF now reduces taxable pay, so a wrong deduction means a wrong PAYE return. Late PAYE filing costs KES 10,000 or 25% of the tax due, whichever is higher, plus 1% interest a month.
Deadline: deduct and submit by the 9th of each month under the SHIF Regulations, 2024.

Sources: SHA public notice on employer remittances and KRA penalties.

NHIF to SHIF Transition: what changed for employers in Kenya

The NHIF to SHIF Transition replaced flat salary bands with a percentage of gross pay. For employers, understanding this change is essential when setting up monthly payroll and checking statutory deductions. SHIF is the NHIF replacement: the Social Health Insurance Act 2023 created the fund, the Social Health Authority (SHA) runs it, and the 2.75% SHIF rate applies to every salaried employee. These are the SHIF Kenya 2026 rules every employer has to follow.

	Old NHIF	New SHIF (2.75%)
How it is calculated	Flat amount set by salary band	2.75% of gross monthly salary
Range	KES 150 to KES 1,700	KES 300 minimum, no upper cap
At KES 100,000 gross	KES 1,700	KES 2,750
Who pays	Employee, deducted by employer	Employee, deducted by employer
Remitted to	NHIF	SHA, through the SHA Employer Portal
Tax treatment	Insurance relief	Deductible from taxable pay (from 27 December 2024)

Monthly contribution examples at common salaries

From roughly KES 33,000 gross upwards, SHIF costs more than NHIF did. Below that, many employees pay less. Every row below uses the KES 300 minimum where it applies.

Gross monthly salary	Old NHIF (flat band)	SHIF (2.75%)	Change
KES 5,999	KES 150	KES 300	+ KES 150
KES 12,000	KES 500	KES 330	− KES 170
KES 20,000	KES 750	KES 550	− KES 200
KES 30,000	KES 900	KES 825	− KES 75
KES 50,000	KES 1,200	KES 1,375	+ KES 175
KES 100,000	KES 1,700	KES 2,750	+ KES 1,050
KES 200,000	KES 1,700	KES 5,500	+ KES 3,800
KES 500,000	KES 1,700	KES 13,750	+ KES 12,050

See every old NHIF band

Gross pay (KES)	Monthly NHIF (KES)
Up to 5,999	150
6,000 to 7,999	300
8,000 to 11,999	400
12,000 to 14,999	500
15,000 to 19,999	600
20,000 to 24,999	750
25,000 to 29,999	850
30,000 to 34,999	900
35,000 to 39,999	950
40,000 to 44,999	1,000
45,000 to 49,999	1,100
50,000 to 59,999	1,200
60,000 to 69,999	1,300
70,000 to 79,999	1,400
80,000 to 89,999	1,500
90,000 to 99,999	1,600
100,000 and above	1,700

Source: NHIF schedule, Legal Notice 14 of 2015 (Kenya Law).

SHIF now comes off before PAYE: a worked example

Since 27 December 2024, SHIF and the employee Housing Levy are deducted from taxable pay (Tax Laws (Amendment) Act 2024). That lowers PAYE. Here is KES 100,000 gross, using NSSF Year 4 rates. Check your own salary with our PAYE calculator.

Line	Amount (KES)
Gross salary	100,000.00
NSSF (6%, Year 4)	− 6,000.00
SHIF (2.75%)	− 2,750.00
Housing Levy (1.5%)	− 1,500.00
Taxable pay	89,750.00
PAYE (after KES 2,400 personal relief)	− 19,308.35
Net pay	70,441.65

Source for the tax treatment: Sage summary of the Tax Laws (Amendment) Act 2024.

NHIF to SHIF Transition: the 4-step guide for employers

Follow these four steps to update your organisation’s payroll. Your SHIF deductions only need to change once, in steps 2 and 3.

Register on the SHA Employer Portal

Create and verify an employer account on the SHA Employer Portal, then add your employees and their dependants. You will also use it to remit contributions and download statements.

Wagemaster: keep one master staff list so the portal and payroll match.

Reconfigure your payroll

As part of the NHIF to SHIF Transition, remove the old NHIF bands. Set SHIF to 2.75% of gross, with a KES 300 minimum and no cap, and deduct it before PAYE is calculated.

Wagemaster: SHIF, NSSF, Housing Levy and PAYE run in one calculation.

Update payslips and records

Show SHIF as its own line, re-run PAYE on the lower taxable pay, and make sure every employee shows the right contribution.

Wagemaster: email payslips show each statutory deduction clearly.

Remit by the 9th, every month

Submit the contributions through the SHA portal on or before the 9th of the following month, and keep your statement as proof.

Wagemaster: the SHA Report gives you the figures ready for remittance.

How Wagemaster supports the NHIF to SHIF Transition

Wagemaster is KRA-compliant payroll and HR software built for Kenyan employers. After the NHIF to SHIF Transition, SHIF becomes part of the same payroll run as other statutory deductions, rather than a separate month-end task.

SHIF at 2.75% on every payslip

Applies the KES 300 minimum and no cap automatically, so you never type a rate into a spreadsheet.

Taken before PAYE

SHIF reduces taxable pay in the same run that works out PAYE, NSSF (Year 4 tiers) and the Housing Levy.

SHA Report and SHA Annual

Produce the SHIF figures for remittance and your year-end records from the payroll you have already run.

Rates you control

If a rate ever changes, update it once in Tax Rates setup and every payslip follows.

Net to gross

Know the take-home an employee needs? Wagemaster works back to the gross, including SHIF.

One-time licence

No annual renewal and no subscription. Your payroll data stays on your own server or PCs, with a Nairobi support team.

Book a Free Demoor see pricing and the payroll software Kenya page

Stop calculating SHIF by hand

Book a free 30-minute demo to see how Wagemaster supports the NHIF to SHIF Transition by processing SHIF, PAYE, NSSF and the Housing Levy together in one payroll run.

Book a Free Demo Call +254 722 718 373 WhatsApp

Rates and rules checked October 2026 against SHA, Tax Laws (Amendment) Act 2024 and PwC Kenya. Always confirm current figures with SHA and KRA before filing.

Author: adminatWM