PAYE, pension and NHF: a payroll checklist for growing Nigerian teams

Every month, Nigerian employers owe four things to the state on behalf of their people: PAYE, pension contributions, NHF, and, for most, NSITF. None of them are complicated on their own. The trouble starts when they are calculated by hand, in four different places, by whoever has time that week.

The four deductions

• PAYE is income tax withheld from each employee and remitted to the relevant state internal revenue service, calculated on taxable income after the consolidated relief allowance.
• Pension under the Contributory Pension Scheme is a minimum of 8% from the employee and 10% from the employer, paid to each person's PFA.
• NHF is 2.5% of basic salary for employees earning above the threshold, remitted to the Federal Mortgage Bank.
• NSITF is 1% of total monthly payroll, paid by the employer for the Employee Compensation Scheme.

Where it goes wrong

Late remittance is the usual failure, and it is rarely because the money is missing. It is because the schedule lived in one person's head, or the figures had to be re-keyed from a spreadsheet into a portal and nobody trusted them enough to submit on time.

A monthly checklist

• Lock the pay period and confirm starters, leavers and salary changes before you run anything.
• Run payroll once, from a single source of employee records, so gross pay and deductions come from the same numbers.
• Generate the PAYE, pension, NHF and NSITF schedules from that run rather than rebuilding them.
• Remit on a fixed calendar and keep the receipts against the run, so an audit is a lookup rather than a search.

EvateHR's Payroll module does the calculation and the schedules in one pass, with the filings recorded against each run. If you are still doing this in spreadsheets, that is the first thing to stop doing.