AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
A UK company can pay people in Nigeria in three main ways: as independent contractors who invoice, through an employer of record that employs them in Nigeria, or through its own Nigerian subsidiary. Whoever is the employer in Nigeria deducts PAYE for the state tax authority, pays at least 10% pension alongside the employee's 8% where there are three or more staff, and handles NSITF, ITF and group life cover.
Hiring in Lagos, Abuja or Port Harcourt is often the first big step for a UK company run by Nigerians abroad: a developer, an operations lead, a customer support team. The hard part is not finding the people. It is deciding who legally employs them, because that choice decides who owes Nigerian tax deductions, pension and insurance, and how much risk sits with the UK company.
The three models side by side
| Model | Who employs | Nigerian payroll duties sit with | Main risk |
|---|---|---|---|
| Independent contractor | No one; the person runs their own business | The contractor files their own tax | The relationship looks like employment in practice |
| Employer of record (EOR) | A Nigerian EOR firm | The EOR, under its contract with you | Cost, and depending on one provider |
| Own subsidiary | Your Nigerian company | Your subsidiary | Set-up, filings and running costs |
Each is lawful when used for what it is. The trouble starts when a full-time, managed, long-term worker is called a contractor to avoid deductions. For the detail of each route see how an employer of record works and contractor agreements without an entity.
What a Nigerian employer has to run each month
Whichever entity is the employer, the Nigerian duties are the same. The core items, with their sources:
- PAYE. The Nigeria Tax Administration Act 2025 gives state internal revenue services the tax of resident individuals, including PAYE, and section 51(6) requires the employer to deduct tax from emoluments. The 2026 bands are set out in Nigerian PAYE for staff in Nigeria. Remit by the 10th of the next month to be safe; the 2025 Act runs penalties from after the 21st, so confirm with the state IRS.
- Pension. PenCom says the Pension Reform Act 2014 covers private employers with three or more employees. The minimum is 10% from the employer and 8% from the employee of monthly emoluments, remitted within seven working days of paying salary.
- Group life insurance. The Act requires employers to hold group life cover of at least three times annual total emolument for each employee.
- NSITF. The Employees' Compensation Act 2010 sets a 1% of total monthly payroll contribution, paid through the NSITF portal.
- ITF and NHF. Training Fund and housing fund contributions may also apply, depending on headcount and turnover.
Our Nigeria library explains the other deductions in full; see NHF, NSITF and ITF.
The UK side
Under Article 15 of the 1987 UK-Nigeria tax treaty, salary is taxable only in the country where the employee lives unless the work is done in the other country. Someone who lives and works in Nigeria is therefore taxed in Nigeria on that pay. GOV.UK's guidance on paying employees working abroad is written for UK staff posted overseas, who stay on UK PAYE unless HMRC confirms a different code after a form P85; locally hired Nigerian staff are a different case, so ask your accountant or HMRC before putting them on a UK payroll. The UK company still records the cost in sterling in its accounts.
Permanent establishment
Staff in Nigeria can create a taxable presence there for the UK company. KPMG's summary of the Nigeria Tax Act notes a broad permanent establishment definition, including agents. Take Nigerian tax advice before your team grows beyond one or two people.
A monthly calendar for a Nigerian payroll
Once the model is chosen, the month follows the same rhythm. A simple version, built from the deadlines above:
| When | Task |
|---|---|
| A few days before payday | Fund the naira account; allow for conversion and bank cut-offs |
| Payday | Pay net salaries; keep the payslips and the payment file |
| Within 7 working days of payday | Remit 10% employer and 8% employee pension to each PFA |
| By the 10th of the next month | Remit PAYE to each employee's state IRS |
| Monthly | NSITF contribution of 1% of payroll |
| By 31 January | Annual employer return of emoluments to each state IRS |
If staff live in different states, PAYE goes to each one's state of residence, not to the state where your office or EOR sits. Keep a record of each employee's address for this reason.
Steps to choose a model
- List each role: hours, who directs the work, how long it will last.
- Treat anyone full-time and managed by you as an employee, and choose an EOR or subsidiary for them.
- Price the employer costs: 10% pension, 1% NSITF, ITF and NHF where they apply, group life premium, plus the EOR fee or entity running costs.
- Decide the pay currency and FX approach; see naira or dollars.
- Put written contracts in place within three months, as the Labour Act requires.
Where Pryme fits
A Pryme Business Account holds pounds and naira side by side, so the UK company can fund a Nigerian payroll from sterling when it chooses, with the rate shown first and the fee on its own line (Swap). Payroll and bulk payouts pay many naira accounts in one run; the Finance agent prepares the batch and a person approves above a set ceiling.
Questions people ask
Can a UK company employ someone in Nigeria directly?
It can, but it then takes on the Nigerian employer's duties, including PAYE, pension and NSITF, and it may create a taxable presence in Nigeria. Many firms use an employer of record or a subsidiary instead.
Do I pay UK PAYE for staff living in Nigeria?
Under the UK-Nigeria treaty, pay for work done in Nigeria by a Nigerian resident is taxable in Nigeria. Confirm the UK payroll treatment with HMRC or your accountant.
How much pension does a Nigerian employer pay?
PenCom's rules set a minimum of 10% from the employer and 8% from the employee of monthly emoluments, for employers with three or more staff.
When is Nigerian PAYE due?
Pay by the 10th of the following month to be safe. The 2025 Act sets penalties after the 21st; confirm with the state tax authority.
Sources
- Nigeria Tax Administration Act 2025 (gazette copy) · accessed Oct 2026
- PenCom: Framework for Micro Pension Plan (coverage of the Pension Reform Act 2014) · accessed Oct 2026
- ThisDay: CPS, what you should know about employee's rights (20 Mar 2023) · accessed Oct 2026
- NSITF: Compensation (Employees' Compensation Act 2010) · accessed Oct 2026
- GOV.UK: 1987 UK-Nigeria double taxation agreement (in force) · accessed Oct 2026
- GOV.UK: Paying employees working abroad (updated 7 Jul 2026) · accessed Oct 2026
- Mondaq (KPMG Nigeria): The Nigeria Tax Act and non-resident companies (13 Aug 2025) · 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.