JusticeSure
    HR & Payroll
    NRS / PITA Compliant
    Updated 2025

    How to Run Monthly Payroll in Nigeria (2025): PAYE, Pension, NHF & NSITF

    A complete guide for Nigerian employers on calculating and remitting PAYE, pension, NHF, and NSITF — with step-by-step instructions, 2025 tax bands, and deadlines you cannot afford to miss.

    What this guide covers

    • ✓ 2025 PAYE progressive tax bands and how to apply them
    • ✓ Pension contributions — 8% employee, 10% employer minimum
    • ✓ NHF (2.5% of basic) and NSITF (1% employer levy)
    • ✓ Step-by-step monthly payroll process with all deadlines
    • ✓ Payroll records employers must keep for NRS compliance
    • ✓ Penalties for late remittance of PAYE and pension

    Key Payroll Facts for Nigerian Employers

    📅
    PAYE Remittance Deadline
    10th of the following month
    🏦
    Pension — Employee Contribution
    Minimum 8% of emolument
    🏢
    Pension — Employer Contribution
    Minimum 10% of emolument
    🏠
    NHF Contribution
    2.5% of employee basic salary
    🛡️
    NSITF Levy
    1% of total emolument (employer only)
    ✅
    PAYE Exemption Threshold
    ₦30,000/month or below

    2025 PAYE Tax Bands at a Glance

    Taxable Income RangeRateTax on Band
    First ₦300,0007%₦21,000
    Next ₦300,00011%₦33,000
    Next ₦500,00015%₦75,000
    Next ₦500,00019%₦95,000
    Next ₦1,600,00021%₦336,000
    Above ₦3,200,00024%On excess

    Taxable income is gross pay minus CRA (₦200,000 + 20% of gross), pension, NHF, NHIS, and life assurance premiums.

    Frequently Asked Questions

    Answers to the most common payroll questions from Nigerian employers

    Nigerian employers must maintain: monthly payroll schedules showing each employee's gross pay, all deductions, and net pay; copies of remittance receipts for PAYE, pension, NHF, and NSITF; annual tax deduction cards (TDC) issued to each employee by January 31; copies of PAYE filing returns submitted to the state IRS; and employment contracts. These records should be kept for at least 6 years to meet NRS audit requirements. Failure to maintain adequate records can result in a back-tax assessment using estimated figures.

    Yes, for any business with more than 2 employees, payroll software significantly reduces errors and compliance risk. Manual payroll calculations are error-prone — a single PAYE miscalculation can trigger penalties. Good payroll software automatically applies the correct PAYE bands, calculates pension, NHF, and NSITF, generates payslips, produces the PAYE remittance schedule required by state IRS offices, and maintains an audit trail. Kontrol by JusticeSure includes built-in payroll for Nigerian SMEs — PAYE, pension, NHF, NSITF, and payslip generation are all automated.

    Step-by-Step: Monthly Payroll Process

    1

    Collect timesheet and attendance data

    Confirm working days, overtime, leave taken, and any bonuses or deductions. This forms the basis for gross pay calculation.

    2

    Calculate gross pay for each employee

    Gross pay = basic salary + housing allowance + transport allowance + other allowances + bonuses. Ensure all allowance components are clearly defined in employment contracts.

    3

    Deduct statutory contributions from employee

    Deduct pension (8% of basic + housing + transport), NHF (2.5% of basic), NHIS if enrolled, and any other authorised deductions. These reduce taxable income.

    4

    Calculate PAYE for each employee

    Apply the Consolidated Relief Allowance (CRA = ₦200,000 + 20% of gross), subtract statutory deductions, then apply the progressive tax bands. State IRS online portals or payroll software automate this.

    5

    Pay net salaries to employees

    Remit net pay (gross minus all deductions) to each employee's bank account. Keep proof of payment for at least 6 years.

    6

    Remit all statutory deductions on schedule

    PAYE → State SIRS by 10th; Pension → PFA within 7 working days; NSITF (1% employer levy) → NSITF by month-end; NHF → FMBN within 30 days.

    7

    File PAYE schedule with state IRS

    Submit the monthly PAYE remittance schedule — a list of all employees, their gross pay, deductions, and PAYE paid — to your state IRS alongside the remittance receipt.

    8

    Issue payslips to employees

    Payslips are a legal obligation. Each payslip must show gross pay, each deduction with the amount, and net pay. Keep signed copies as part of your payroll records.

    Automate your Nigerian payroll

    Kontrol by JusticeSure calculates PAYE, pension, NHF, and NSITF automatically — generates payslips, produces remittance schedules, and keeps you compliant with every Nigerian statutory deadline.

    Related guides: PAYE for Employers · Nigerian Labour Act · Bookkeeping for SMEs · Invoicing in Nigeria
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    What is PAYE and how does it relate to monthly payroll in Nigeria?

    Pay As You Earn (PAYE) is a payroll deduction system under which employers calculate, deduct, and remit personal income tax on behalf of their employees every month. Under the Nigeria Revenue Service Act 2025 (NTA 2025) and the Personal Income Tax Act (PITA), every employer with staff earning above the minimum exemption threshold must register with the relevant State Internal Revenue Service (SIRS), compute tax using the progressive PAYE bands, deduct the amount from each employee's gross pay, and remit to the state by the 10th day of the following month.

    What are the current PAYE tax bands for Nigerian employees in 2025?

    Nigeria uses a progressive PAYE structure. For 2025, the bands applied to taxable income (after statutory deductions) are: first ₦300,000 at 7%, next ₦300,000 at 11%, next ₦500,000 at 15%, next ₦500,000 at 19%, next ₦1,600,000 at 21%, and income above ₦3,200,000 at 24%. Taxable income = gross income minus Consolidated Relief Allowance (CRA) of ₦200,000 + 20% of gross income, pension (8% employee), NHF (2.5%), NHIS, and life assurance. Employees earning ₦30,000 or below per month are exempt from PAYE.

    How does pension work in Nigerian payroll?

    Under the Pension Reform Act 2014, every employer with 3 or more employees must participate in the Contributory Pension Scheme (CPS). The minimum contribution is 10% of monthly emolument (basic + housing + transport) from the employer and 8% from the employee — a total of at least 18%. Both must be remitted to the employee's chosen Pension Fund Administrator (PFA) within 7 working days of payroll payment. Employers who fail to remit on time face penalties of not less than 2% of the unpaid amount per month.

    What is NHF and who must deduct it?

    The National Housing Fund (NHF) is a compulsory savings scheme under the National Housing Fund Act. Every Nigerian employee earning ₦3,000 or more per month must contribute 2.5% of their basic monthly salary. Employers deduct this at source and remit to the Federal Mortgage Bank of Nigeria (FMBN) within 30 days of deduction. NHF contributions are tax-deductible, reducing the employee's taxable income. Employers who fail to deduct or remit NHF face a fine of ₦50,000 or 6 months imprisonment.

    What is NSITF and how is it calculated?

    The Nigeria Social Insurance Trust Fund (NSITF) is a workplace accident and disability insurance levy. Employers must remit 1% of each employee's total monthly emolument to NSITF. Unlike PAYE or pension, NSITF is entirely an employer obligation — nothing is deducted from the employee. Registration is done at any NSITF branch and must be completed within 6 weeks of employing staff. Failure to register or remit attracts penalties under the Employee's Compensation Act 2010.

    What are the steps to run monthly payroll in Nigeria?

    A compliant monthly payroll process in Nigeria involves: (1) Collect attendance/timesheet data and confirm working days, (2) Compute gross pay = basic + housing allowance + transport + other allowances, (3) Deduct statutory items: pension (8%), NHF (2.5%), NHIS if enrolled, (4) Calculate taxable income and apply PAYE bands, (5) Deduct PAYE from net pay, (6) Pay net salary to employees by end of month, (7) Remit PAYE to state SIRS by 10th of next month, (8) Remit pension to PFA within 7 working days, (9) Remit NSITF 1% by month-end, (10) Issue payslips and file monthly PAYE schedule with the state IRS.

    What payroll records must Nigerian employers keep?

    Nigerian employers must maintain: monthly payroll schedules showing each employee's gross pay, all deductions, and net pay; copies of remittance receipts for PAYE, pension, NHF, and NSITF; annual tax deduction cards (TDC) issued to each employee by January 31; copies of PAYE filing returns submitted to the state IRS; and employment contracts. These records should be kept for at least 6 years to meet NRS audit requirements. Failure to maintain adequate records can result in a back-tax assessment using estimated figures.

    Should I use payroll software for my Nigerian business?

    Yes, for any business with more than 2 employees, payroll software significantly reduces errors and compliance risk. Manual payroll calculations are error-prone — a single PAYE miscalculation can trigger penalties. Good payroll software automatically applies the correct PAYE bands, calculates pension, NHF, and NSITF, generates payslips, produces the PAYE remittance schedule required by state IRS offices, and maintains an audit trail. Kontrol by JusticeSure includes built-in payroll for Nigerian SMEs — PAYE, pension, NHF, NSITF, and payslip generation are all automated.