Deduction for deposits into a registered HOSP, capped at KES 8,000 a month.
Allowable monthly deduction
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PAYE saved (monthly)
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PAYE saved (annual)
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A deduction, not a credit, and why that matters
A Home Ownership Savings Plan lets a first-time buyer set money aside with an approved institution toward a permanent home, and the deposits are deductible from your taxable pay. The word deductible is doing real work here. Unlike personal relief or insurance relief, which are credits subtracted straight from the tax due, a HOSP deposit comes off your income before PAYE is worked out. That means the tax you save depends on the band your last shillings sit in. For someone deep in the 30 percent band, every shilling of deduction saves 30 cents of tax. For someone whose pay barely clears the tax-free threshold, the same deduction saves far less. This tool captures that by recomputing your PAYE with and without the deduction and reporting the exact difference.
The cap that limits the benefit
You can save as much as you like into the plan, but the slice that reduces your tax is capped. The deduction this calculator applies is limited to KES 8,000 a month, which works out to KES 96,000 a year. Deposit KES 10,000 a month and only KES 8,000 counts for tax; the extra KES 2,000 still goes toward your home, it simply earns no further tax break. Treat that 8,000 monthly cap as the figure the calculator uses rather than as settled current law, because the qualifying rules and the approved-institution conditions sit with KRA and have moved around in recent Finance Acts. The funds also generally have to be used to buy or build a first permanent residence, so confirm your scheme qualifies before you count on the deduction.
What KES 8,000 a month is worth to a 120,000 earner
Picture an employee with KES 120,000 of monthly taxable pay who saves KES 10,000 into a HOSP. The deduction is capped at KES 8,000, so the calculator compares PAYE on KES 120,000 against PAYE on KES 112,000. Because those top shillings fall in the 30 percent band, the whole KES 8,000 is sheltered at 30 percent. These figures use the rates this calculator applies.
| Step | Amount (KES) |
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So KES 96,000 set aside across the year trims the tax bill by KES 28,800. That is effectively a 30 percent rebate on money you were going to save toward a home anyway. The chart shows where the deposit goes.
Who gets the most from a HOSP
The relief favours higher earners and those genuinely saving for a first home. If your taxable pay is comfortably in the 25 or 30 percent band, the deduction lands at that rate and the saving is meaningful. If your income only just exceeds the personal-relief threshold, the deduction may shelter income taxed at 10 percent, so the rebate is smaller. A common error is treating the saving as if it were the full deposit returned. It is not. You are getting back only the tax you would otherwise have paid on that slice, which is why a low-band earner sees a thinner benefit than the headline cap suggests.
Can I claim HOSP relief and mortgage interest relief at the same time?
They serve different stages. HOSP relief is for the saving phase before you buy; owner-occupied mortgage interest relief applies once you have the loan. In practice you would use one then the other rather than both on the same home in the same period. Check the current rules with KRA, since the interaction has been adjusted in recent Finance Acts.
What happens if I withdraw the money for something other than a home?
HOSP deposits come with strings. If you pull the funds out for a purpose other than buying or building a qualifying first home, you can lose the tax benefit and may face a clawback, depending on scheme rules and the holding conditions. This calculator only estimates the deduction while you are contributing toward a home, so confirm the withdrawal terms with your institution before you commit.