True cost to employ
Gross plus employer NSSF and levy
A nil PAYE return tells KRA that there is no PAYE to declare for the relevant period. It is not a request to postpone payment, and it does not close the employer’s PAYE registration. KRA expressly requires a nil return when there is no PAYE to declare.
Before deciding that a month is nil, reconcile the payroll. The employer cost calculator helps distinguish employee deductions from employer costs; the employer guide puts the return alongside the other monthly obligations.
Check why the month appears to be nil
| Situation | What to check |
|---|---|
| No employees or employment payments in the period | Confirm there are no final payments, arrears or taxable benefits overlooked. |
| Payroll calculation produces zero PAYE | Retain the calculation and check the current return’s employee and other reporting requirements. |
| PAYE was deducted but the business cannot pay | This is a liability, not a nil month. |
| The business has stopped trading | Check the obligation’s formal status; inactivity does not itself cancel registration. |
A zero bank payment does not by itself establish zero taxable employment income. Benefits, deductions, salary timing and final settlements can complicate the picture. Resolve those items before making the declaration.
File for the correct employer and period
- Confirm the employer PIN and active PAYE obligation.
- Review the month’s payroll and supporting records, including payments to former staff.
- Sign in at the official iTax portal and use the appropriate nil-return route for Income Tax – PAYE.
- Check the period and declaration carefully before submitting.
- Download the acknowledgement and verify the period appears as filed.
The official PAYE return guide shows a File Nil Return option. If the portal asks for other payroll or levy information, follow those current instructions; do not erase real employee information merely to force a zero return. Keep the evidence explaining why PAYE was nil with the acknowledgement.
The deadline still applies
KRA states that the monthly PAYE return is due by the ninth day of the following month. For example, an October return is due by 9 November. A month with no PAYE to declare should not simply be skipped.
KRA lists the late-filing penalty as the higher of 25% of tax due and KES 10,000. Zero tax therefore does not mean there is no late-filing exposure. Check any actual assessment with KRA rather than assuming a nil return removes an existing penalty.
Nil PAYE does not settle other obligations
Check NSSF, SHA/SHIF, Housing Levy and any other applicable employer obligations separately. Their bases and filing or payment requirements are not established by the PAYE total. The payroll setup checklist helps identify the accounts that need a separate reconciliation.
Likewise, the employer’s monthly PAYE return is different from an employee’s individual income tax return. Do not choose an individual nil income-tax declaration when the task is an employer PAYE return.
If staff have left or the business has closed
KRA allows an application to cancel a tax obligation through iTax. Its cancellation guidance says to continue filing and paying as required until official confirmation of cancellation arrives. Save that confirmation and its effective date; an application receipt is not the same thing.
If a nil return was filed but taxable payroll is later identified, investigate a PAYE return amendment. For a month with PAYE to report, follow the normal PAYE filing process.
Sources and review date
Published and reviewed on 31 October 2026. Use the official instructions and rules applicable to the return period.