What is the deadline for PAYE remittance?

PAYE must be remitted by the 10th of the following month. For example, December salaries' PAYE is due by January 10th.

How do I calculate PAYE for employees?

Apply the progressive tax brackets to each employee's taxable income (gross salary minus pension, NHF, and NHIS). The first ₦800,000 is tax-free, then rates increase from 15% to 25%.

What deductions reduce taxable income?

Mandatory deductions include: Pension (8% employee contribution), NHF (2.5%), and NHIS (5%). Employees can also claim rent relief (20% of rent, max ₦500,000) on their annual return.

Do I need to deduct PAYE from contractors?

No, contractors are not employees. However, you may need to deduct Withholding Tax (5-10%) from contractor payments, which is different from PAYE.

What if an employee has multiple jobs?

Each employer deducts PAYE based on the salary they pay. The employee may need to file a personal return if they're under-taxed due to multiple employments.

Can employees claim additional reliefs?

Yes, employees can claim rent relief on their personal annual return even if their employer doesn't factor it in. They can also claim dependent children relief and other allowances.

PAYE (Pay As You Earn): Complete Guide for Nigeria 2026

What is PAYE (Pay As You Earn)?

Quick Answer

PAYE is the system for collecting income tax from employees. Employers must deduct tax from salaries based on the tax brackets, remit to FIRS by the 10th of each month, and file annual returns.

Who Must Register for PAYE (Pay As You Earn)?

All employers with one or more employees

Companies and businesses of any size

Government agencies and parastatals

NGOs and international organizations with Nigerian staff

Individuals who employ domestic staff

How to Register for PAYE (Pay As You Earn)

Get Company TIN

Ensure your business has a valid Tax Identification Number from FIRS.

Register as PAYE Employer

Complete PAYE employer registration on FIRS TaxPro Max portal.

Set Up Payroll System

Configure your payroll to calculate and track PAYE deductions for each employee.

Collect Employee TINs

Ensure all employees have valid TINs for proper tax crediting.

Start Monthly Deductions

Begin deducting PAYE from employee salaries and maintaining records.

2026 PAYE Tax Brackets

Annual Taxable Income	Tax Rate	Cumulative Tax
₦0 - ₦800,000	0%	₦0
₦800,001 - ₦3,000,000	15%	₦330,000
₦3,000,001 - ₦12,000,000	18%	₦1,950,000
₦12,000,001 - ₦25,000,000	21%	₦4,680,000
₦25,000,001 - ₦50,000,000	23%	₦10,430,000
Above ₦50,000,000	25%	Variable

Tax-free threshold: The first ₦800,000 of annual income is tax-free. This means employees earning less than ₦66,667/month pay no income tax.

How to Calculate PAYE

PAYE Calculation Steps

1
Start with Gross Salary
Basic salary + allowances + benefits
2
Deduct Pension (8%)
Employee contribution to approved pension scheme
3
Deduct NHF (2.5%)
National Housing Fund contribution
4
Deduct NHIS (5%)
National Health Insurance Scheme contribution
5
Apply Tax Brackets
Calculate tax on remaining taxable income

Example: ₦500,000/month Salary

Gross Monthly Salary₦500,000

Pension (8%)-₦40,000

NHF (2.5%)-₦12,500

NHIS (5%)-₦25,000

Monthly Taxable Income₦422,500

Annual Taxable Income₦5,070,000

Monthly PAYE₦70,500

Allowable Deductions

Pension

Employee contribution to approved pension scheme

NHF

2.5%

National Housing Fund contribution

NHIS

National Health Insurance Scheme

Total Deductions

15.5%

Combined statutory deductions

Note: Employees can claim additional rent relief (20% of annual rent, max ₦500,000) on their personal annual tax return, even if not factored into monthly PAYE.

Compliance Checklist

Obtain TIN for all employees

Calculate and deduct correct PAYE from salaries

Remit PAYE by the 10th of each month

File monthly PAYE schedule with employee details

Issue annual tax deduction cards to employees

File annual employer return by January 31

Keep payroll records for at least 6 years

Track Compliance with KeepAm

Penalties for Non-Compliance

Violation	Penalty	Notes
Late remittance of PAYE	10% of amount + interest at CBN rate + 2%	-
Failure to deduct PAYE	Employer becomes personally liable for the tax	-
Late filing of monthly returns	₦25,000 per month of default	-
Failure to file annual return	₦500,000 + ₦50,000 per day of default	-
Incorrect tax calculation	Liability for shortfall + penalties + interest	-

Avoid penalties: Set up reminders for all filing deadlines. KeepAm sends automatic notifications before each due date.

Frequently Asked Questions

Stay Compliant with KeepAm

Track all your tax obligations, get deadline reminders, and generate filing-ready reports with KeepAm.

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