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The short answer
An employer paying staff who live in Lagos deducts PAYE and remits it to the Lagos State Internal Revenue Service (LIRS), because Nigeria's state revenue services collect income tax from individuals resident in their state. A UK-owned business normally does this through its Nigerian company, registered as a corporate taxpayer on the LIRS eTax portal; PAYE is due by the 10th of the month after payday and an annual employer return by 31 January.
The UK parent may set salaries and approve payroll, but Lagos PAYE is a Nigerian obligation, owed to a Nigerian state, and it runs on Nigerian dates. Getting registration right at the start avoids the back-dated assessments that catch out many foreign-owned teams.
Why LIRS, and not the NRS
The Nigeria Tax Administration Act 2025 gives the Nigeria Revenue Service (which replaced FIRS) responsibility for taxes on companies and non-residents, and gives each state's internal revenue service responsibility for income tax on resident individuals, including PAYE. So the company's own tax is federal, while staff PAYE goes to the state where each employee is resident. Staff living in Lagos are LIRS taxpayers even if the office is elsewhere; a staff member who lives in Ogun State and commutes is an Ogun State taxpayer. For a side-by-side of state tax offices, see LIRS, FCT-IRS or RIRS.
Who should be the employer
- Nigerian subsidiary. The usual route. The subsidiary employs the staff, registers with LIRS and operates PAYE.
- UK company with no Nigerian entity. Registering and operating Nigerian payroll directly is harder, and employing people in Nigeria raises permanent establishment questions (when a UK company owes Nigerian tax).
- Employer of record. A Nigerian provider employs the staff for you and runs PAYE (employer of record in Nigeria).
Registering on LIRS eTax
LIRS runs registration, payments, PAYE schedules and returns through its eTax portal at etax.lirs.net. TechCabal's April 2026 guide describes login types for Taxpayer, Corporate Admin and Consultant, and a Payer ID with a prefix of "N-" for individuals or "C-" for corporate taxpayers; new users choose "Create New Payer ID". Have the company's CAC details and Tax ID ready. Techpoint's guide to the 2025 reform acts notes that every taxable person must have a Tax ID, so collect staff Tax IDs at onboarding rather than at the first deadline.
- Register the company as a corporate taxpayer on eTax and note the C- Payer ID.
- Collect each employee's Tax ID, home address and LGA, and pension details.
- Each month, calculate PAYE, upload the monthly schedule and pay by the 10th of the following month.
- Keep the LIRS receipts with the payroll for that month.
- File the annual employer return (Form H1) with each employee's pay and tax for the year.
Deadlines
PwC's summary (reviewed May 2026) says PAYE must be remitted on or before the 10th of the month following the month in which salaries were paid, and that every employer files a return of all emoluments by 31 January each year. TechCabal reported that LIRS moved its 2026 employer annual returns deadline from 1 February to 7 February, a one-off, so watch for LIRS notices each January.
What runs alongside PAYE
PAYE is one of several monthly payroll items for Lagos staff, and they go to different places:
- Pension
- Employee and employer contributions to each employee's pension fund administrator, within seven working days of payday under the Pension Reform Act 2014, as ThisDay reported
- NHF
- A housing fund contribution whose application to private-sector staff changed in 2023; see NHF deductions
- NSITF and ITF
- Employer contributions, not deductions from pay; see NSITF and ITF
Common mistakes
- Remitting all staff PAYE to LIRS when some staff live outside Lagos.
- Paying from the UK parent with no Nigerian payer registered, so receipts do not match the employer on the return.
- Leaving the annual return until the January deadline without monthly schedules to support it.
- Changing a staff member's home address without updating the state they are taxed in.
Worked example: one Lagos employee in 2026
Example only, simplified. Annual gross pay ₦6,000,000. Employee pension at 8% of ₦6,000,000 is ₦480,000 (assuming pensionable pay equals gross). Annual rent ₦1,500,000, so rent relief is 20% = ₦300,000, under the ₦500,000 cap BusinessDay describes for the Nigeria Tax Act 2025. Taxable income: ₦6,000,000 − ₦480,000 − ₦300,000 = ₦5,220,000.
| Band (Nigeria Tax Act 2025, per BusinessDay) | Income in band | Tax |
|---|---|---|
| First ₦800,000 at 0% | ₦800,000 | ₦0 |
| Next ₦2,200,000 at 15% | ₦2,200,000 | ₦330,000 |
| Next ₦9,000,000 at 18% | ₦2,220,000 | ₦399,600 |
| Total | ₦5,220,000 | ₦729,600 a year, ₦60,800 a month |
Check: ₦800,000 + ₦2,200,000 + ₦2,220,000 = ₦5,220,000; ₦330,000 + ₦399,600 = ₦729,600; ₦729,600 ÷ 12 = ₦60,800. For the full bands, see Nigeria PAYE tax bands for 2026.
Where Pryme fits
Pryme Business Accounts include payroll tools that pay staff in naira from the same account that receives funding in pounds (payroll). The Finance agent can prepare the monthly PAYE schedule and payment for a person to approve before the 10th (Finance agent); nothing is paid without approval. Naira deposits are held by a licensed Nigerian microfinance bank.
Questions people ask
Do I pay PAYE to LIRS or the NRS for Lagos staff?
To LIRS. Under the Nigeria Tax Administration Act 2025, states collect income tax from resident individuals, while the NRS handles company tax.
When is PAYE due in Lagos?
On or before the 10th of the month after salaries are paid, per PwC's May 2026 summary.
Can a UK company register with LIRS without a Nigerian subsidiary?
It is harder, and employing staff directly can raise permanent establishment questions. Most UK firms use a Nigerian subsidiary or an employer of record.
When is the LIRS employer annual return due?
By 31 January each year, per PwC; LIRS moved the 2026 deadline to 7 February as a one-off, as TechCabal reported.
Sources
- Nigeria Tax Administration Act 2025 (gazette copy) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, individual tax administration (reviewed 29 May 2026) · accessed Oct 2026
- TechCabal: How to file tax on the LIRS eTax portal (2 Apr 2026) · accessed Oct 2026
- BusinessDay: Nigeria Tax Act 2025 PAYE bands explained (12 Jan 2026) · accessed Oct 2026
- Techpoint Africa: Guide to the Nigerian tax reform acts (5 May 2026) · accessed Oct 2026
- ThisDay: CPS, what you should know about employees' rights (20 Mar 2023) · 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.