--- oa_review_kit: v1 guide_slug: ng-payroll guide_version: ng-payroll@2026-05-27T06:40:57.409Z archetype: payroll --- # Review kit: NG Payroll Thank you for reviewing this Guide. This kit is one file with three parts: how to use it, an interview prompt for your AI, and the Guide itself. ## How to use this kit (3 steps, about 15 minutes) 1. Open the AI you already use (ChatGPT, Claude, Gemini, anything that reads markdown) and paste in everything from "INTERVIEW PROMPT" below, including the Guide at the end. 2. Your AI interviews you like a colleague, one question at a time. Just talk: war stories, walk-throughs, the mistakes you catch. No writing required. 3. Your AI writes your answers up as a single markdown file. Hand it back at openaccountants.com/skills/ng-payroll/handback (also linked from the Guide page: "Hand back your file"). What you added is published under your name and credential. If your AI cannot produce the exact output format, hand back whatever you have: a revised Guide file, a worksheet, or plain notes. We take those too, and a person reviews them by hand. The format below is the one we can apply straight away. --- # INTERVIEW PROMPT (paste from here down into your AI) You are interviewing a practising accountant about how they actually do the work covered by the attached Guide ("NG Payroll", slug `ng-payroll`). Interview them like a colleague doing a handover. Do not lecture. Ask ONE question at a time and wait for the answer. Chase war stories and specifics: what kind of client, which portal step, how big the penalty was. The rates, thresholds, and citations are our job; we refresh those from primary sources. Capture ONLY what is NOT derivable from law: - order of operations, and what a wrong order corrupts - what to ask a client before computing anything - what to assume when a fact is unknown, and how it gets flagged - the most-missed traps, with penalty size and who falls in - how the portal or filing channel actually behaves - what has to reconcile before anyone signs - when to refuse the work and hand it to a human specialist If the accountant corrects a rate, threshold, or deadline in the Guide along the way, record it in the FACT CORRECTIONS table, but do not steer the interview toward numbers. ## Questions to work through Ask these in order, one at a time. Skip any the accountant has already covered; follow up where a story has specifics worth pinning down. Each question is tagged with the method slot(s) it feeds. 1. [intake_questions] [conservative_default] Walk me through onboarding a new employee into payroll. What do you collect, and what's your default when the paperwork is missing? 2. [trap] What's the most common way a new starter's withholding gets set wrong? 3. [edge_case] What's different about directors or owners on payroll that a generic guide never says? 4. [filing_mechanics] What has to happen on or before payday, and what happens if it's late even when the money was right? 5. [trap] Which employer allowances or reliefs are claimed wrongly, or missed entirely? What's the eligibility gotcha? 6. [judgment_rule] How do you set base salary vs allowances so the statutory contributions come out right? 7. [edge_case] What does a mid-year change (a raise crossing a ceiling, an employee crossing an age threshold) do to contributions, and where do people get it wrong? 8. [cross_check] What do you reconcile every month, and again at year-end? What must tie to what? 9. [edge_case] Which regional or state variations bite multi-location employers? 10. [filing_mechanics] Walk me through your deposit calendar. Which payment deadlines differ from filing deadlines? 11. [scope_gate] Ever refused or unwound a payroll client? What made it untouchable? 12. [trap] Tell me the late-deposit war story you use to scare clients, with the real interest and damages. ## Method slots (for tagging the write-up) - `scope_gate` (Scope gate and refusals): when to stop and send the client to a human - `sequence` (Order of operations): what order to do things in, and what a wrong order corrupts - `intake_questions` (Client intake questions): what to ask a client before computing - `evidence` (Documents and evidence): which documents to insist on, and what is draft-grade vs file-grade - `judgment_rule` (Judgment rules): how a practitioner actually picks when the law allows two routes - `conservative_default` (Conservative defaults): what to assume when a fact is unknowable at draft time - `trap` (Traps and most-missed items): the mistakes everyone makes, what they cost, and who falls in - `filing_mechanics` (Portal and filing mechanics): how submission actually works: channel, order, what locks - `cross_check` (Cross-checks before signing): what has to reconcile with what before delivery, and how close is close enough - `pattern_library` (Pattern library): how messy real-world data (bank lines, payout platforms) maps to tax categories - `edge_case` (Edge-case playbook): the client situations that change the method, not just the numbers - `unsettled_law` (Unsettled-law flags): what not to finalise right now, and why - `handback_protocol` (Hand-back protocol): what the finished working paper contains and who reviews it ## Output format: oa-handback v1 When the interview is done, write the answers up as ONE markdown file in exactly this shape. Fill in the reviewer's real name, credential, and email (ask for them at the end if they have not come up). Every method block gets a `### [method:]` heading where `` is one of the 13 slot ids above. Keep `guide_slug` and `guide_version` exactly as given. Omit any section the interview produced nothing for, but keep the headings that remain exactly as shown. The `fact_key` column may be left blank when unknown. ```markdown --- oa_handback: v1 guide_slug: ng-payroll guide_version: ng-payroll@2026-05-27T06:40:57.409Z reviewer_name: reviewer_credential: # free text: CPA, EA, ACCA, Steuerberater... reviewer_email: verdict: --- ## METHOD ### [method:filing_mechanics] ### [method:intake_questions] - - ... ## FACT CORRECTIONS | fact_key | current | correct | source | |---|---|---|---| | | | | | ## FLAGS - [unsettled] - [refer] ## NOTES ``` If for any reason you cannot produce this exact format, output the accountant's corrections and methods as clear plain notes instead. The hand-back page accepts plain notes and revised Guide files too; this format is an optimization, never a gate. --- # THE GUIDE UNDER REVIEW --- name: ng-payroll description: Use this skill whenever asked to compute, review, or advise on end-to-end Nigerian monthly payroll for employees — gross-to-net calculation, payslip generation, statutory deduction sequencing (Pension, NHF, NHIS, CRA, PAYE), employer remittance scheduling (PAYE to SIRS, Pension to PFC/PFA, NHF to FMBN, NSITF to NSITF), and year-end Form H1 reconciliation. Trigger on phrases like "Nigeria payroll", "compute Nigerian payroll", "Nigerian pay slip", "payslip Nigeria", "monthly payroll Nigeria", "payroll computation Nigeria", "PAYE and pension together", "deductions Nigeria", "gross to net Nigeria", "Lagos payroll", "LIRS payroll", "FIRS payroll", "Form H1 Nigeria", "annual payroll reconciliation Nigeria", or any request involving running monthly payroll for one or more employees in Nigeria. This skill is the ORCHESTRATOR — it pulls PAYE rules from `ng-paye` and statutory employer/employee contributions (Pension, NHF, NSITF, ITF, NHIS, EDT) from `ng-statutory-deductions` and sequences them into the correct computation order. ALWAYS read this skill before touching Nigerian payroll computation. jurisdiction: NG domain: payroll tax_year: 2025 --- # ng-payroll ## Nigeria — Payroll Computation (End-to-End) — Skill v1.0 > **Scope note:** This skill is the **end-to-end monthly payroll orchestrator**. It does NOT redefine PAYE brackets, CRA formulas, pension percentages, or NHF thresholds — those live in the dependency skills (`ng-paye`, `ng-statutory-deductions`). This skill defines the **sequence**, the **payslip layout**, the **remittance calendar**, and the **year-end reconciliation workflow**. > > **2025 changes summary (v1.0):** The Nigeria Tax Administration Act 2025 (NTA 2025), passed in Q1 2025 with phased commencement through 2026, introduces a **unified payroll module under FIRS Tax Pro-Max** intended to consolidate PAYE filings for federal MDAs and (subject to MoU) state Internal Revenue Services. As of the 2025 tax year, **state IRS portals (LIRS e-tax, FCT-IRS, OGIRS, etc.) remain the primary PAYE remittance channel** for private-sector employers. See Section 5 for the current remittance routing. ## Verified rates & thresholds (accountant-reviewed) > Reviewed against the cited tax authorities by **Omolola Fasasi** on 2026-06-21. > Items flagged for further clarification are tracked separately and excluded here. > This block is generated from verified `skill_facts` — edit the facts, not the prose. ### ng-payroll - **Employee Pension contribution rate** — 8% of BHT (Basic + Housing + Transport) _(PRA 2014 §4(3))_ - **Employer Pension contribution rate** — 10% of BHT (Basic + Housing + Transport) _(PRA 2014)_ - **Employee NHF contribution rate** — 2.5% of basic salary - **NHF applicability threshold (monthly basic salary)** — NGN 3,000 per month - **NHIS employee contribution rate (federal MDAs, common default)** — 5% of emloyee's basic salary monthly _(national health insurance authourity)_ - **Consolidated Relief Allowance (CRA) — annual minimum floor** — The Consolidated Relief Allowance (CRA) was completely abolished and replaced in the Personal Income Tax (PIT) regime. It no longer exists for payroll and tax computations. _(nigerian tax act 2025)_ - **Consolidated Relief Allowance (CRA) — monthly minimum floor** — _(nigerian tax act 2025)_ - **Consolidated Relief Allowance (CRA) — percentage of gross income component** — _(nigerian tax act 2025)_ - **Minimum tax rate (NTA 2025)** — 0.15 _(nigerian tax act 2025)_ - **PAYE monthly remittance deadline** — 10th of the following month _(PITA)_ - **Pension remittance deadline (employee + employer combined)** — Within 7 working days of salary payment date _(PRA 2014)_ - **NHF remittance deadline** — Within 1 month of deduction - **NSITF monthly remittance deadline** — on or before the 15th day of the succeeding month _(Employees' compensation Act (ECA) 2010)_ - **ITF annual return deadline** — march 31st of every year - **Form H1 (Annual Employer's Return) filing deadline** — 31 January of the following year _(PITA)_ - **Form H1 coverage period** — 1 January – 31 December (preceding tax year) _(PITA)_ - **PAYE late remittance penalty — surcharge rate** — 10% of unremitted tax _(PITA §82)_ - **PAYE late remittance penalty — interest rate** — CBN MPR _(nigerian tax act 2025)_ - **Pension late remittance penalty** — ≥2% per month of unremitted amount _(PRA 2014 §11(7))_ - **NHF late remittance penalty — individual** — NGN 5,000 or a one year prison term or both - **NHF late remittance penalty — body corporate** — NGN 50,000 - **NSITF late remittance penalty — surcharge rate** — 10% of contribution + applicable interest - **Termination payment / gratuity exemption review threshold** — gratuity are tax -excempt _(nigerian tax act 2025)_ - **Salary sacrifice into pension above statutory employee minimum — permitted maximum per PRA 2014** — Above 8% statutory minimum permitted under PRA 2014 §11(7) _(PRA 2014 §11(7))_ - **NTA 2025 FIRS Tax Pro-Max — Phase 1 commencement (federal MDAs)** — tax pro max is no longer in use - **NTA 2025 FIRS Tax Pro-Max — Phase 2 commencement (state IRS integration, expected)** — tax pro max is no longer in use - **Personal / children allowances — abolished** — Abolished in 2020 _(PITA (amended 2020))_ ## Section 1 — Quick reference: payroll component order **Payroll component order table** | Step | Component | Effect on employee PAYE base | Paid by | | --- | --- | --- | --- | | 1 | **Gross monthly emolument** (basic + housing + transport + other taxable allowances + BIK) | Starting point | — | | 2 | − Employee Pension contribution (8% of BHT, see `ng-statutory-deductions`) | **Reduces** PAYE base | Employee | | 3 | − Employee NHF contribution (2.5% of basic, if applicable) | **Reduces** PAYE base | Employee | | 4 | − Employee NHIS contribution (if scheme operated; varies) | **Reduces** PAYE base | Employee | | 5 | = Gross income for CRA purposes | — | — | | 6 | − Consolidated Relief Allowance (CRA) — `max(NGN 200,000, 1% × gross) + 20% × gross` | **Reduces** PAYE base | — | | 7 | = Chargeable income | — | — | | 8 | Apply PITA Sixth Schedule progressive brackets (see `ng-paye`) | → PAYE liability | — | | 9 | = **PAYE for the month** | — | Employee (withheld) | | 10 | Net pay = Gross − Employee Pension − Employee NHF − Employee NHIS − PAYE − any voluntary deductions | — | — | The order of deductions matters because **Pension and NHF reduce the chargeable income** before PAYE is computed, while **NSITF, ITF, EDT and the employer pension share are employer costs** that do NOT affect the employee's PAYE base. **Employer-side costs (parallel, do NOT affect employee net)** | Component | Rate / amount | Notes | | --- | --- | --- | | Employer Pension | 10% of BHT | Remitted to employee's PFA via PFC | | NSITF (ECS) | 1% of total payroll | Employer-only | | ITF | 1% of total payroll (employers with ≥ 5 staff OR turnover ≥ NGN 50m) | Annual return | | EDT (Tertiary Education Tax) | Not employer payroll cost — corporate tax on assessable profits | | | NHIS employer share | If group scheme operated; varies | | > **Conservative default:** When in doubt whether a deduction reduces the PAYE base, treat it as **non-deductible** (i.e. PAYE is computed on the higher figure) and flag for reviewer. Over-withholding can be refunded via year-end reconciliation; under-withholding triggers SIRS penalties and interest. ## Section 2 — Required inputs & refusal catalogue ### 2.1 Inputs required to run a payroll **Inputs required to run a payroll table** | Input | Source | Notes | | --- | --- | --- | | TIN (Tax Identification Number) | Employee record / JTB | Required for PAYE filing; flag if missing | | State of tax residence | Employee record | Determines which SIRS receives PAYE (per PITA §2(2)) | | Gross monthly emolument breakdown | Contract / HR | Must split Basic / Housing / Transport / Other | | Pension scheme status | RSA + PFA details | Confirm employee has RSA opened | | NHF applicability | Salary ≥ NGN 3,000/month and Nigerian citizen | See `ng-statutory-deductions` | | NHIS scheme details | If operated by employer | Optional except for federal MDAs | | Marital / dependent status | Not relevant for CRA (Nigeria abolished personal/children allowances in 2020) | Retained only for HR records | | Benefits in Kind (BIK) for the month | HR / accounts payable | Must be quantified before PAYE | ### 2.2 Refusal catalogue — out of scope for this skill **Refusal catalogue table** | Scenario | Action | | --- | --- | | Cross-border employment (employee tax-resident outside Nigeria, employer in Nigeria) | Refer to a qualified Nigerian tax consultant — treaty analysis required | | Expatriates with split-pay arrangements (home-country + Nigeria) | Out of scope; refer to specialist | | Directors' fees not paid through payroll | Out of scope — covered by WHT under `ng-paye` | | Employee stock options / share-based payments | Out of scope — bespoke valuation and CGT interaction | | Salary sacrifice into pension above 8% statutory | Permitted under PRA 2014 §11(7) but flag for reviewer — quantum and PAYE-deductibility need confirmation | | Termination payments / gratuity > NGN 10m | Flag — exemption thresholds and tax treatment require legal review | | Backdated salary adjustments spanning > 1 tax year | Refer to specialist — re-opening of prior-year H1 may be required | ## Section 3 — Step-by-step payroll computation The procedure below is the **canonical monthly run**. Apply per employee. ### Step 1 — Build the gross emolument - **Gross monthly emolument formula** — Basic salary B + Housing allowance H + Transport allowance T + Other taxable allowances O (utility, meal, leave, entertainment, etc.) + Cash bonus paid in month X + Benefits in Kind (BIK) K = Gross monthly emolument G = B + H + T + O + X + K - **Note on BHT** — Pension contributions are computed on **Basic + Housing + Transport** (BHT), not on G. See `ng-statutory-deductions` for the legislative basis (PRA 2014 §4(3)). _(PRA 2014 §4(3))_ ### Step 2 — Compute statutory deductions that reduce PAYE base **Statutory deductions reducing PAYE base table** | Deduction | Formula | Notes | | --- | --- | --- | | Employee Pension | 8% × (B + H + T) | Per PRA 2014 | | Employee NHF | 2.5% × B | Only if Nigerian citizen AND monthly basic ≥ NGN 3,000 | | Employee NHIS | Per scheme rules (commonly 1.75% × B for federal MDAs) | Skip if no scheme | Call these collectively `D_pre`. ### Step 3 — Compute CRA gross income and CRA - **CRA computation formula** — Gross_for_CRA = G − D_pre CRA = max(NGN 200,000 annual / NGN 16,666.67 monthly, 1% × Gross_for_CRA) + 20% × Gross_for_CRA **Monthly application:** Divide annual CRA components by 12, OR — recommended approach — compute on annualized gross and divide the result by 12. The annualized approach is more accurate when income varies month-to-month and matches the year-end reconciliation. See `ng-paye` for the canonical formula. ### Step 4 — Chargeable income - **Chargeable income formula** — Chargeable_monthly = Gross_for_CRA − CRA_monthly ### Step 5 — Apply PITA Sixth Schedule progressive brackets - **Annualization method** — Annualize `Chargeable_monthly × 12`, apply the brackets from `ng-paye`, divide the result by 12 to get **monthly PAYE**. The annualized method avoids the regressive distortion that occurs when applying brackets directly to monthly income. ### Step 6 — Minimum tax check - **Minimum tax check** — If the computed PAYE is less than **1% of gross income** (minimum tax under PITA §37, see `ng-paye`), substitute the minimum tax. Common for low earners; rare for the salary range typically processed via formal payroll. _(PITA §37)_ ### Step 7 — Net pay - **Net pay formula** — Net pay = G − Employee Pension − Employee NHF − Employee NHIS − PAYE − Voluntary deductions (loan repayments, salary advance recoveries, union dues, etc.) ### Step 8 — Employer-side accruals (parallel posting) **Employer-side accruals table** | Item | Posted to | | --- | --- | | Employer Pension 10% × BHT | DR Payroll expense, CR Pension payable | | NSITF 1% × total payroll | DR Payroll expense, CR NSITF payable | | ITF 1% × total payroll (qualifying employers) | DR Payroll expense, CR ITF payable (accrued monthly, paid annually) | ## Section 4 — Payslip components & sample A **conforming Nigerian payslip** must show, at minimum: 1. Employer name, address, employer TIN 2. Employee name, employee TIN, RSA PIN, state of tax residence 3. Pay period and pay date 4. Gross emolument breakdown (basic, housing, transport, other allowances, BIK) 5. Statutory deductions, **itemized** (Pension, NHF, NHIS, PAYE) 6. Voluntary deductions 7. Net pay 8. Employer contributions (for transparency — Pension 10%, NSITF, ITF) 9. YTD totals (cumulative gross, cumulative PAYE, cumulative pension) ### Sample payslip — Lagos employee, NGN 500,000 gross monthly > Full worked numbers are in Section 7. The layout below is the recommended template. ``` +-----------------------------------------------------------------+ | ACME NIGERIA LTD PAYSLIP — MAY 2025 | | 12 Awolowo Road, Ikoyi, Lagos | | Employer TIN: 12345678-0001 | +-----------------------------------------------------------------+ | Employee: Adaeze Okafor TIN: 98765432-0001 | | RSA PIN: PEN100123456789 State of residence: LAGOS | | Pay date: 28 May 2025 Period: 01-31 May 2025 | +-----------------------------------------------------------------+ | EARNINGS NGN | | Basic salary 250,000.00 | | Housing allowance 100,000.00 | | Transport allowance 50,000.00 | | Utility allowance 50,000.00 | | Meal allowance 50,000.00 | | Gross emolument 500,000.00 | +-----------------------------------------------------------------+ | DEDUCTIONS NGN | | Employee Pension (8% × BHT) 32,000.00 | | NHF (2.5% × Basic) 6,250.00 | | PAYE 56,xxx.xx (see §7) | | Total deductions | +-----------------------------------------------------------------+ | NET PAY NGN xxx,xxx | +-----------------------------------------------------------------+ | EMPLOYER CONTRIBUTIONS (info only) NGN | | Employer Pension (10% × BHT) 40,000.00 | | NSITF (1% × Gross) 5,000.00 | | ITF (1% × Gross, accrued) 5,000.00 | +-----------------------------------------------------------------+ | YTD TOTALS (Jan–May 2025) NGN | | Gross YTD 2,500,000.00 | | PAYE YTD [auto] | | Pension YTD (employee) 160,000.00 | +-----------------------------------------------------------------+ ``` ## Section 5 — Monthly remittance calendar **Monthly remittance calendar table** | Item | Recipient | Deadline | Channel | | --- | --- | --- | --- | | **PAYE** | Relevant State IRS (state of employee's tax residence) | **10th of the following month** | LIRS e-tax (Lagos); FCT-IRS portal (FCT); other state IRS portals or bank Pay-Direct | | **Employee + Employer Pension** | Pension Fund Custodian (PFC) for credit to employee's PFA | **Within 7 working days** of salary payment date | PFA transfer via PFC; PenCom RSA Multifund schedule | | **NHF** | Federal Mortgage Bank of Nigeria (FMBN) | **Within 1 month** of deduction | FMBN-designated commercial banks | | **NSITF (ECS)** | Nigeria Social Insurance Trust Fund | **Monthly, by the last day of the following month** | NSITF e-portal / designated banks | | **NHIS (if operated)** | NHIS / HMO | Per scheme rules — typically monthly | HMO direct | | **ITF (employer only)** | Industrial Training Fund | **Annual** — by 1 April of following year | ITF portal | ### NTA 2025 unified module (status note) - **NTA 2025 unified payroll module rollout** — The NTA 2025 unified payroll module under **FIRS Tax Pro-Max** is being rolled out in phases: - **Phase 1 (2025):** Federal MDAs migrate from IPPIS-only PAYE flows to Tax Pro-Max integration. Private-sector employers are NOT required to switch. - **Phase 2 (TBC, expected 2026):** State IRS integration via MoU. **Until the relevant state IRS publishes its onboarding notice, continue using the existing state portal (LIRS e-tax, etc.).** - **Conservative default:** Continue with current state IRS portals; track NTA 2025 commencement notices monthly. ### Late-payment penalties (summary — full detail in `ng-paye` and `ng-statutory-deductions`) **Late-payment penalties table** | Item | Penalty | | --- | --- | | PAYE late remittance | 10% of unremitted tax + interest at CBN MPR + 5% (PITA §82) | | Pension late remittance | 2% per month of unremitted amount (PRA 2014 §11(7)) | | NHF late remittance | NGN 50,000 (individual) / NGN 100,000 (body corporate) + recovery | | NSITF late remittance | 10% of contribution + interest | ## Section 6 — Year-end activities ### 6.1 Form H1 — Annual Employer's Return - **Form H1 filing requirement** — Every employer must file **Form H1 (Annual Employer's Return of all emoluments paid to employees)** with the relevant State IRS by **31 January** of the following year, covering the preceding tax year (1 January – 31 December). **Form H1 field table** | Field | Content | | --- | --- | | Employer details | Name, TIN, address | | Schedule of employees | Name, TIN, RSA PIN, total gross emolument, total reliefs (CRA, pension, NHF, NHIS), chargeable income, total PAYE remitted by month | | Reconciliation | Sum of monthly PAYE remitted must equal computed annual PAYE per employee | | Variance | Any under-remittance is payable; over-remittance is offsetable against the next year (refund procedurally difficult) | ### 6.2 Employee tax deduction certificate (informal "P9A/P9B equivalent") Nigeria has no single statutory equivalent of the Kenyan P9A/P9B form, but employers customarily issue an **"Employee Tax Deduction Certificate"** at year-end showing: - Gross emolument per month and YTD - Statutory deductions (Pension, NHF, NHIS) per month and YTD - PAYE deducted per month and YTD - Receipt numbers / SIRS PAYE schedule references This certificate enables the employee to claim WHT credits, file self-assessment if they have other income sources, or substantiate income for credit/visa applications. ### 6.3 Reconciliation checklist **Reconciliation checklist table** | Check | Pass criterion | | --- | --- | | Sum of monthly Form A (PAYE schedule) = Form H1 total | ✓ | | Pension contributions remitted = 18% × annual BHT for each employee | ✓ | | NHF contributions remitted = 2.5% × annual basic for each qualifying employee | ✓ | | NSITF remitted = 1% × annual total payroll | ✓ | | ITF annual return filed (if applicable) | ✓ | | Any retroactive bonuses / 13th-month spread per `ng-paye` rules | ✓ | | BIK valuations consistent across months | ✓ | ## Section 7 — Worked example **Scenario:** Software developer, **Lagos resident**, NGN **500,000 gross monthly**, employed full-time at a private fintech. No BIK. Nigerian citizen. Has RSA, TIN, and is NHF-eligible. Employer operates no NHIS group scheme. ### A — Gross emolument breakdown **Gross emolument breakdown table** | Component | NGN | | --- | --- | | Basic (50% of gross) | 250,000 | | Housing (20%) | 100,000 | | Transport (10%) | 50,000 | | Utility allowance | 50,000 | | Meal allowance | 50,000 | | **Gross monthly (G)** | **500,000** | BHT = 250,000 + 100,000 + 50,000 = **400,000** ### B — Statutory deductions reducing PAYE base **Statutory deductions reducing PAYE base table** | Item | Formula | NGN | | --- | --- | --- | | Employee Pension | 8% × 400,000 | 32,000 | | NHF | 2.5% × 250,000 | 6,250 | | NHIS | n/a (no scheme) | 0 | | **D_pre total** | | **38,250** | ### C — CRA computation (monthly basis using annualization) - **CRA computation worked example** — Gross_for_CRA (monthly) = 500,000 − 38,250 = 461,750 Gross_for_CRA (annualized) = 5,541,000 CRA (annual) = max(200,000, 1% × 5,541,000) + 20% × 5,541,000 = max(200,000, 55,410) + 1,108,200 = 200,000 + 1,108,200 = 1,308,200 CRA (monthly) = 1,308,200 / 12 = 109,016.67 ### D — Chargeable income - **Chargeable income worked example** — Chargeable_monthly = 461,750 − 109,016.67 = 352,733.33 Chargeable_annual = 4,232,800 ### E — PAYE (PITA Sixth Schedule, applied annually then divided by 12) **PAYE bracket table** | Bracket | Slice | Rate | Tax (annual) | | --- | --- | --- | --- | | 0 – 300,000 | 300,000 | 7% | 21,000 | | 300,001 – 600,000 | 300,000 | 11% | 33,000 | | 600,001 – 1,100,000 | 500,000 | 15% | 75,000 | | 1,100,001 – 1,600,000 | 500,000 | 19% | 95,000 | | 1,600,001 – 3,200,000 | 1,600,000 | 21% | 336,000 | | 3,200,001 – 4,232,800 | 1,032,800 | 24% | 247,872 | | **Annual PAYE** | | | **807,872** | | **Monthly PAYE** | 807,872 / 12 | | **67,322.67** | Minimum tax check: 1% × 500,000 = 5,000 → not binding (computed PAYE is higher). ### F — Net pay **Net pay table** | Item | NGN | | --- | --- | | Gross | 500,000.00 | | − Employee Pension | (32,000.00) | | − NHF | (6,250.00) | | − PAYE | (67,322.67) | | **Net pay** | **394,427.33** | ### G — Employer cost ledger (monthly) **Employer cost ledger table** | Item | NGN | | --- | --- | | Gross emolument | 500,000.00 | | Employer Pension (10% × BHT) | 40,000.00 | | NSITF (1% × Gross) | 5,000.00 | | ITF accrual (1% × Gross) | 5,000.00 | | **Total employer cost** | **550,000.00** | ### H — Remittances arising from this payslip **Remittances arising from this payslip table** | Recipient | Amount NGN | Deadline | | --- | --- | --- | | LIRS (PAYE) | 67,322.67 | 10 Jun 2025 | | PFC → PFA (Pension total) | 72,000.00 | within 7 working days of pay date | | FMBN (NHF) | 6,250.00 | within 1 month | | NSITF | 5,000.00 | last day of following month | | ITF | 5,000.00 (accrued; paid annually by 1 Apr 2026) | annual | ## Section 8 — Conservative defaults **Conservative defaults table** | Situation | Conservative position | | --- | --- | | Pension status unclear (RSA exists?) | Assume RSA exists and deduct 8% / pay employer 10% — flag for HR; under-remittance triggers 2%/month penalty | | NHF applicability unclear | If Nigerian citizen and basic ≥ NGN 3,000, deduct 2.5% — flag for reviewer if foreign national | | BIK valuation uncertain | Use higher of cost-to-employer or open-market value — flag | | Bonus / 13th-month timing | **Spread evenly across the 12 months of the period it relates to** for PAYE smoothing; flag if employer prefers month-paid taxation (allowed but produces a higher PAYE spike that month) | | Multi-state employee (works across states) | Use the state where employee is **principally resident** per PITA §2(2); flag for reviewer | | Mid-month joiner / leaver | Pro-rate gross emolument, pro-rate CRA on annualized basis, full statutory deductions on actual paid amounts | | Employee TIN missing | Compute PAYE normally but **flag immediately** — SIRS reconciliation will reject schedule without TIN | | Salary advance / loan recovery | Show as voluntary deduction below the line; does NOT reduce PAYE base | | Pay in foreign currency | Convert to NGN at CBN official rate on pay date; document the rate used | | Late hire — backdated salary | Apply current-month PAYE on full amount paid; do NOT spread retroactively without reviewer sign-off | ## Section 9 — Sources **Sources table** | Source | Reference | | --- | --- | | Personal Income Tax Act (PITA) Cap P8 LFN 2004, as amended by Finance Acts 2019–2023 | Federal Inland Revenue Service | | Pension Reform Act 2014 (PRA 2014) | National Pension Commission (PenCom) | | National Housing Fund Act, Cap N45 LFN 2004 | Federal Mortgage Bank of Nigeria (FMBN) | | Employees Compensation Act 2010 (NSITF) | Nigeria Social Insurance Trust Fund | | Industrial Training Fund Act, Cap I9 LFN 2004 (as amended 2011) | Industrial Training Fund | | National Health Insurance Authority Act 2022 | NHIA (formerly NHIS) | | Nigeria Tax Administration Act 2025 (NTA 2025) | FIRS Tax Pro-Max unified module | | Lagos State Internal Revenue Service e-tax portal | https://etax.lirs.net | | FCT Internal Revenue Service portal | https://fctirs.gov.ng | | FIRS Tax Pro-Max | https://taxpromax.firs.gov.ng | | Companion skill — PAYE rules | `ng-paye` | | Companion skill — Statutory deductions | `ng-statutory-deductions` | | Companion skill — Income tax (self-employed) | `ng-income-tax` | ## *OpenAccountants — open-source accounting skills for AI* *This is not tax advice. All outputs must be reviewed by a qualified Nigerian payroll professional or tax consultant before any payslip is issued or any remittance is made.* ## Talk to a verified accountant This skill is a tool, not an engagement. Every taxpayer's situation is different, and the rules in the skill may not match your specific facts. To speak with one of the licensed accountants who verifies skills for your jurisdiction — **no liability on either side until you and the accountant sign a formal engagement letter** — book a free 30-minute call: **→ [Book a call](https://calendly.com/openaccountants-info/30min)** We'll route you to the named verifier covering your country or state. You can also see the full list of verified accountants at [openaccountants.com/network](https://openaccountants.com/network).