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The short answer
Before your first payroll in Nigeria, register for PAYE with the state tax authority, get a pension employer code through a PFA and register with NSITF (and with ITF if you meet its threshold). Then work out each person's gross-to-net, pay salaries, remit pension within seven working days and PAYE by the 10th of the following month, issue payslips and keep the records.
Before the first salary: registrations
Most first-payroll problems start weeks earlier, when a registration was skipped. Each body below has its own rules, so tick them off in this order:
| Registration | Who it applies to | What the source says |
|---|---|---|
| Tax ID and PAYE with the state IRS | Every employer | Under the Nigeria Tax Administration Act 2025, businesses need a Tax ID; companies' IDs are generated from CAC details. PAYE goes to the state where each employee is resident. |
| Pension employer code | Private employers with three or more staff (Contributory Pension Scheme) | PenCom's FAQ says the code is free, obtained by written request through any PFA with your letterhead, incorporation certificate and Tax ID evidence. |
| NSITF (Employees' Compensation Scheme) | Every registered employer | 1% of total monthly payroll, through the Employer Self-Service Portal; a one-time onboarding fee applies (amount not shown on NSITF's page). |
| ITF | Employers with 5+ staff, or fewer than 5 with turnover of ₦50m+ a year | 1% of annual payroll under the ITF (Amendment) Act 2011. |
| Group life insurance | Every employer, per PenCom's notice | Cover of at least three times each employee's annual total emolument. |
| NHF | Compulsory only for public-sector staff since 2023 | Private-sector employees may contribute voluntarily at 2.5%. |
Our guides to registering for PAYE and NHF, NSITF and ITF go into each one. Also collect, for each employee, their NIN, the PFA they chose and their RSA PIN; PenCom's FAQ says a new employee opens an RSA with a PFA of their choice, and the employer opens one for them after six months if they do not.
Paperwork for each employee
Section 7 of the Labour Act requires a written statement of terms within three months of a worker starting: the employer's name, the nature of the job, notice periods, the wage and how it is calculated and paid, hours, holidays and sick pay. Doing this before the first payroll means the pay you calculate matches the contract. Section 15 says wages fall due at the end of the agreed pay period, and at intervals of no more than a month.
Gross-to-net: a worked example
The example below uses the Nigeria Tax Act 2025 bands as summarised by BusinessDay in January 2026 (first ₦800,000 at 0%, next ₦2.2m at 15%, and so on) and the PenCom minimum of 8% employee and 10% employer. It assumes all pay is pensionable and the employee claims rent relief, which is 20% of annual rent capped at ₦500,000.
| Line | Annual | Monthly |
|---|---|---|
| Gross pay | ₦3,000,000 | ₦250,000 |
| Employee pension (8%) | ₦240,000 | ₦20,000 |
| Rent relief (20% of ₦600,000) | ₦120,000 | - |
| Taxable income (3,000,000 − 240,000 − 120,000) | ₦2,640,000 | - |
| Tax: first ₦800,000 at 0% | ₦0 | - |
| Tax: next ₦1,840,000 at 15% | ₦276,000 | ₦23,000 |
| Net pay (250,000 − 20,000 − 23,000) | ₦2,484,000 | ₦207,000 |
On top of the ₦250,000, the employer pays 10% pension (₦25,000 a month) and 1% NSITF (₦2,500 a month for this one person), and, if it meets the ITF threshold, 1% of annual payroll (₦30,000 for the year). Run your own figures the same way, and check with your state tax authority how it applies the reliefs.
Pay day and the remittance calendar
- Pay salaries on the date in the contract, by bank transfer to each employee's own account, and keep the bank's confirmation for every payment.
- Remit pension to each employee's PFA within seven working days of paying salary, as PenCom's FAQ states. Late remittance attracts a penalty of at least 2%, credited to the employees' RSAs. See pension remittance steps.
- Remit PAYE to the state tax authority by the 10th of the following month, the date PwC's summary of the 2024 withholding regulations gives for PAYE. See the PAYE deadline.
- Pay NSITF through its employer portal on your monthly payroll; NSITF's page does not state a deadline, so ask your branch.
After the run: payslips and records
Give every employee a payslip showing gross pay, each deduction and net pay, so they can match it to their RSA statement and tax records. Then file away the payroll register, remittance receipts and bank evidence.
- The Labour Act (section 75) requires records of wages and conditions, including each worker's name, address, date of birth, next of kin, engagement date and NSITF number, kept for three years.
- The Nigeria Tax Administration Act 2025 (section 31) requires books and records sufficient to work out tax to be kept for at least six years after the year of assessment. Keep payroll for six years to satisfy both.
Where Pryme fits
Pryme payroll lets you pay a whole team from a Pryme Business Account. The Finance agent can prepare the run and the remittance list; a person approves payments above the ceiling you set, and each action is recorded.
Questions people ask
What do I need before running payroll in Nigeria?
A Tax ID and PAYE registration with the state tax authority, a pension employer code from any PFA if you have three or more staff, NSITF registration, ITF registration if you meet the threshold, and group life insurance. Collect each employee's NIN and RSA PIN.
When is PAYE due in Nigeria?
PwC's summary of the 2024 withholding regulations says PAYE is paid to the state tax authority by the 10th of the following month. Check your state authority's portal for its current filing steps.
When must pension be remitted?
PenCom says within seven working days of paying salaries. Late payment carries a penalty of at least 2%, paid into employees' RSAs.
How long should payroll records be kept in Nigeria?
The Labour Act says three years for wage records; the Nigeria Tax Administration Act 2025 says at least six years for tax records. Keeping payroll for six years covers both.
Sources
- Labour Act, Cap. L1, Laws of the Federation of Nigeria 2004 (PLAC text) · accessed Oct 2026
- PenCom: Frequently asked questions (2023 edition) · accessed Oct 2026
- NSITF: Services (Employees' Compensation Scheme) · accessed Oct 2026
- BusinessDay: Nigeria Tax Act 2025 personal income tax bands explained (12 Jan 2026) · accessed Oct 2026
- PwC Nigeria: Highlights of the Deduction at Source (Withholding) Regulations 2024 (Jul 2024) · accessed Oct 2026
- Nigeria Tax Administration Act 2025 (gazette copy) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.