PAYE reliefs Nigerian staff claim in writing

The deductions besides rent relief that Nigerian employees can claim against PAYE, why claims must be in writing, and the evidence to collect.

By Achekam · 11 October 2026 · 4 min read · For Running a business businesses in Nigeria

Since the Nigeria Tax Act took effect, rent relief has had most of the attention. Staff ask about it, payroll officers set it up, and everyone moves on. Yet the Act lists several other deductions an employee can claim before tax is worked out, and an employee who pays life assurance premiums or a mortgage on their own home may be paying more PAYE than they need to.

For the employer, the risk runs both ways. Ignore valid claims and staff are overtaxed. Accept claims on a verbal say-so and the business may have under-deducted tax with nothing to show for it. This article sets out what the Act allows, how claims should be made, the evidence to keep, and how Achekam's payroll fits in.

The deductions in section 30

Under the Nigeria Tax Act, 2025, an individual's tax rates apply after the reliefs and exemptions in section 30. The eligible deductions under section 30(2)(a) include:

• contributions to the National Housing Fund;
• contributions to the National Health Insurance Scheme;
• contributions under the Pension Reform Act;
• interest on loans for an owner-occupied residential house;
• life assurance or deferred annuity premiums;
• rent relief of 20% of annual rent paid, subject to a maximum of N500,000.

The NRS lists similar items on its page about individual income tax, naming contributions to approved pension schemes, life insurance premiums and the National Housing Fund, alongside loss relief for businesses and capital allowances on assets, and it advises consulting a tax professional or the regulations for the reliefs available. Read its individual income tax page for the NRS's own summary of who files, what they file and the deductions they may claim.

Once reliefs are taken, the Act's bands apply: 0% on the first N800,000 of taxable income and rising rates above that. The full bands are set out in Nigerian PAYE bands from 2026.

Claims are made in writing

Section 31 of the Act requires deductions to be claimed in writing in the form the relevant tax authority prescribes. That has two consequences for an employer.

First, a claim is not a conversation. An employee who mentions a life policy in the corridor has not made a claim. Ask for it in writing, on the authority's form where one is prescribed, and file it.

Second, the form belongs to the relevant tax authority, which for most employees is the State of residence. Check with that State's revenue service which form it expects, rather than assuming one State's practice holds everywhere.

The evidence a clearance certificate later asks for

Claims made today are tested later. The FCT-IRS checklist for a tax clearance certificate requires evidence of payment for allowable deductions claimed by the employee, namely pension, NHF, NHIS and life assurance.

So the paper an employee hands you now is the paper you will need when the business applies for its own clearance certificate. For each claim, keep:

• the written claim itself;
• proof the premium, contribution or interest was actually paid, such as an insurer's statement or a lender's certificate of interest;
• the period it covers, so it can be matched to the payroll months.

Pension and NHF are easier, because the employer deducts and remits them and holds the proof already. Life assurance and mortgage interest are paid by the employee directly, so the proof has to come from them.

Pension: the minimum rates

PwC says the minimum contributory pension contribution is 18% of monthly emolument, at least 10% by the employer and 8% by the employee, or 20% where the employer bears the whole contribution. It adds that the employer's contributions are deductible for company income tax. The employee's share is the one that counts as their relief.

How Achekam's payroll handles it

Achekam's Nigerian payroll calculates PAYE on the Nigeria Tax Act 2025 bands, together with pension, the opt-in National Housing Fund, NSITF, the ITF levy, rent relief and the minimum-wage exemption, from a table a person confirms. PAYE is assigned to each employee's State of residence. NHF is opt-in per employer, and the employer states which pay it is calculated on.

So pension, NHF and rent relief are part of the calculation the payroll already does. Life assurance premiums, health insurance contributions and mortgage interest are not among the items the payroll is described as calculating. Before changing anyone's PAYE for one of those claims, agree with your adviser how it will be reflected, and keep the written claim and evidence on file whatever you decide.

Staff updating their details

A staff member whose login is linked to their payroll record can submit detail changes through self-service for payroll to decide, as well as download payslips, apply for leave and submit expense claims. A change in rent or a new pension arrangement can come in that way, and payroll decides whether to accept it. Ask staff to attach or send the written claim and the evidence at the same time.

A reliefs checklist for payroll

1. Tell staff at the start of each year which reliefs exist and that claims must be in writing.
2. Ask each State revenue service which form it prescribes.
3. Collect written claims, with evidence of payment, before applying anything.
4. Apply pension, NHF and rent relief through the payroll's confirmed table.
5. For other deductions, agree the treatment with your adviser first.
6. File claims and evidence by employee and year, ready for a clearance certificate.

Pension remittance per administrator is covered in paying pension to each PFA, and the NHF set-up in National Housing Fund deductions for Nigerian staff. Send the reminder to staff this month, before anyone asks.

General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.