Nigeria Employer Payroll — PAYE, Pension, NHF & Form H1

Collect the minimum data required before any payroll computation can begin. Every employee must have a TIN (Joint Tax Board), a Retirement Savings Account (RSA) PIN with a licensed PFA, and a confirmed state of tax residence — that state's IRS receives PAYE, not FIRS. NHF eligibility (Nigerian citizen, basic salary ≥ ₦3,000/month) and NHIS scheme participation are confirmed here.

Construct each employee's gross monthly emolument by splitting the package into Basic (B), Housing (H), Transport (T), and other taxable allowances. The BHT sub-total (Basic + Housing + Transport) is the pension computation base under PRA 2014 §4(3). Benefits in Kind (BIK) are quantified at the higher of cost-to-employer or open-market value and added to gross. Confirm any cash bonuses or 13th-month payments due this cycle.

Compute the four statutory deductions in the correct order. Employee pension (8% × BHT, PRA 2014) and NHF (2.5% × Basic, NHF Act) reduce the PAYE base; NHIS (if scheme operated) also reduces the base. Employer pension (10% × BHT), NSITF (1% × gross payroll, Employees Compensation Act 2010), and ITF (1% × gross payroll, accrued monthly, paid annually by 1 April) are employer-side costs and do not affect employee net pay or PAYE.

Apply the Consolidated Relief Allowance (CRA = max(₦200,000, 1% × gross-for-CRA) + 20% × gross-for-CRA) to arrive at annual chargeable income, then run the PITA Sixth Schedule progressive brackets (7% on first ₦300k; 11% on next ₦300k; 15% on next ₦500k; 19% on next ₦500k; 21% on next ₦1.6m; 24% above ₦3.2m). Annualize, compute annual PAYE, divide by 12 for the monthly withholding amount. Run the minimum tax check: if computed PAYE is below 1% of gross income (PITA §37), substitute the minimum.

Produce a conforming Nigerian payslip for each employee showing: employer name, address and TIN; employee name, TIN, RSA PIN, state of residence; pay period and pay date; gross emolument breakdown; itemised statutory deductions (Pension, NHF, NHIS, PAYE); voluntary deductions (loan repayments, salary advances, union dues); net pay; employer contributions (Pension 10%, NSITF, ITF) shown for transparency; and YTD cumulative totals. Net pay = G − Employee Pension − NHF − NHIS − PAYE − voluntary deductions.

Initiate five separate remittances on the statutory deadlines: PAYE to the relevant State IRS (LIRS e-tax for Lagos; FCT-IRS portal for Abuja; other state portals or bank Pay-Direct) by the 10th of the following month; combined employee + employer pension (18% of BHT per employee) to the Pension Fund Custodian (PFC) for credit to each employee's PFA within 7 working days of pay date; NHF (2.5% × basic) to FMBN-designated banks within 1 month; NSITF (1% × gross) to the NSITF e-portal by the last day of the following month; and ITF (1% × gross payroll) accrued monthly and paid annually by 1 April.

At 31 December, reconcile the 12 monthly PAYE schedules: sum of monthly remittances must equal the computed annual PAYE per employee. Reconcile pension (18% × annual BHT per employee), NHF (2.5% × annual basic), NSITF (1% × annual gross payroll), and the ITF annual filing. File Form H1 (Annual Employer's Return of all emoluments paid to employees) with the relevant State IRS by 31 January. Issue each employee an Employee Tax Deduction Certificate (annual payslip summary showing gross, statutory deductions, and PAYE by month) to allow self-assessment filing or WHT credit claims.