That moment you’re chilling, your freelance gigs are flowing, then boom—your phone pings with a reminder from KRA. Tax season is here again. For many freelancers in Nairobi, Mombasa, and beyond, filing returns feels like a confusing maze of iTax forms and unclear rules. One mistake can lead to penalties or a hefty unexpected bill. But it doesn’t have to be a nightmare.
This guide breaks down the 8 best tips for filing accurate tax returns as a Kenyan freelancer. We’re talking practical, straight-to-the-point advice you can use right now, from understanding your obligations to claiming every shilling you deserve. Let’s get your taxes sorted, so you can get back to your hustle.
1. Know Your Tax Obligations: It’s Not Just Income Tax
First things first, understand what you’re paying for. As a freelancer, you’re running a one-person business. Your main tax is Personal Income Tax, calculated on your net profit (income minus allowable expenses). But that’s not all.
If your annual turnover exceeds KES 5 million, you must also register for and charge Value Added Tax (VAT). Most freelancers won’t hit this, but it’s good to know the threshold.
Don’t Forget the Advance Tax (if you use a car)
This is a classic Kenya-specific trap. If you use a personal car for business (e.g., a photographer traveling to shoots, a consultant visiting clients), you MUST pay Advance Tax when acquiring or renewing your logbook. It’s KES 2,400 per passenger capacity or KES 1,800 per tonne for goods vehicles. Pay it via iTax, or NTSA will block your renewal. This is a prepayment, not an extra tax—you claim it as a credit when filing your annual return.
2. Separate Your Finances: Get a Business Account
Mixing your M-Pesa personal wallet with client payments is a direct route to a headache. You’ll lose track of what’s business income and what’s for your weekend plans in Westie or a trip to Diani.
Open a dedicated business bank account or even a separate M-Pesa till number. Channel all client payments there. This makes tracking your income for your accurate tax return effortless. Banks like ABSA, NCBA, and KCB have affordable SME accounts. The discipline here saves you hours of digging through statements later.
3. Track Every Expense (Yes, Even the Small Airtime)
KRA allows you to deduct legitimate business expenses from your income. This lowers your taxable profit, meaning you pay less tax. But you must have proof.
- Home Office Costs: A percentage of your rent, Wi-Fi (like Zuku or Safaricom Home), and electricity (KPLC tokens) if you work from home.
- Transport: Fuel receipts, boda boda or Uber/Bolt fares to client meetings, even SGR tickets if you travel for work.
- Supplies & Software: Receipts for a new laptop from shops like Click or Vivid Gold, graphic design software subscriptions, or even domain hosting.
- Marketing: Costs for boosted social media posts, business cards printed locally, or a Google Ads spend.
Keep all receipts, even the small ones. A simple spreadsheet or a local app like Lipa Later’s Record or a folder on your phone can work.
4. Master the iTax Platform: File Early, Avoid the June Rush
Everything happens on iTax. Don’t wait until the midnight deadline on June 30th when the system is overloaded and crashing. File early in the year. Familiarize yourself with the forms now.
For most freelancers, the key form is the ITR Form for Individuals in Business. Log in, navigate to the returns section, and select the correct year of income. Have your records ready before you start. Filing early also gives you time to correct any errors without panic.
5. Calculate Your Provisional Income & Pay Installments
This is a pro-move that smoothes out your tax burden. If you expect your business income to be above KES 24,000 per month, you should be paying Provisional Tax in installments during the year.
You estimate your annual profit, calculate the tax due, and pay it in three installments (due in April, August, and December). The final balance is settled when you file your return. This avoids a massive, shocking tax bill in June and keeps you compliant throughout the year, reducing potential penalties.
6. Understand Allowable Deductions vs. Disallowable Expenses
Not every expense is deductible. Knowing the difference is crucial for an accurate tax return.
- ALLOWABLE: Office rent portion, salaries for an assistant, professional fees (e.g., paying an accountant), business-related phone calls and data bundles, stationery, specific business insurance.
- DISALLOWABLE: Personal clothing, fines and penalties (like a late filing penalty from KRA), personal entertainment, political contributions, the cost of your own permanent home. You cannot claim your entire personal lifestyle as a business expense.
7. The Kenyan-Specific Section: Navigating Local Realities
Let’s get real about the Kenyan freelance context. Your biggest tool is your phone. Use it. Take a photo of every receipt immediately—from the printer in Tom Mboya Street to the boda guy who doesn’t have a receipt book (just note the details in your phone).
Be smart about “informal” payments. That KES 500 you paid a county askari for a “permit” to shoot a video in a public space? It’s not an official receipt, so it’s not deductible. Factor these frustrating but real costs into your pricing from the start.
Consider the Seasonal Cash Flow
Your income might dip during the long rains (March-May) when clients slow down, or peak before Christmas. Set aside a percentage of every payment (aim for 15-20%) in a separate savings pot like a KCB M-Pesa goal or a bank account. This is your tax fund. When the provisional tax installment is due in April (during the rains), you won’t be stranded because your cash flow is low.
8. When to Get Professional Help
There’s no shame in calling in the experts. If your income is growing complex, you’re hitting the VAT threshold, or you just hate the paperwork, hire a certified tax agent.
For between KES 5,000 and KES 20,000 annually (depending on complexity), a good accountant will handle everything, ensure maximum deductions, and represent you if KRA has queries. This fee is itself a tax-deductible business expense. It’s an investment that saves you money, time, and stress.
Wrapping Up: Accuracy is Your Peace of Mind
Filing accurate tax returns as a freelancer in Kenya is about discipline, not genius. Start by separating your money, track every shilling spent on your hustle, and understand the local rules on iTax. Use your phone to document everything and plan for Kenya’s seasonal income flows. Paying your provisional installments on time keeps KRA off your back and your finances predictable.
The goal isn’t just to avoid penalties—it’s to claim what’s rightfully yours and keep more of your hard-earned money. Take control of your taxes, so you can focus on what you do best: your work. Got a specific tax question from your freelance journey? Drop it in the comments below—let’s help each other grow.