School Payroll in Nigeria (2026): PAYE Under the New Tax Act, Pension, NHF and Payslips Explained

Payroll is the one job a school cannot get wrong twice. Pay a teacher late or deduct the wrong tax and the staff room hears about it before the bell. This guide explains how school payroll works in Nigeria in 2026, what changed on 1 January when the Nigeria Tax Act 2025 took effect, and what a correct payslip looks like, whether you run payroll in a spreadsheet or in software like Safeticha.

What school payroll includes

School payroll is the monthly process of calculating each staff member's gross pay, deducting the statutory items the law requires, applying any loans or advances, and paying the net amount while keeping a record that an auditor or a tax officer can follow. A complete school payroll covers six things:

• Salary components: basic salary and allowances such as housing, transport and meal, set per employee.
• PAYE: personal income tax deducted at source and remitted to the state internal revenue service where the employee lives.
• Pension: contributions under the Pension Reform Act, by the employee and the employer.
• Other statutory items: National Housing Fund (NHF), National Health Insurance (NHIS), NSITF and ITF, depending on the school's size and registrations.
• Loans, advances and adjustments: salary advances before festive periods, staff loans, one-off bonuses and deductions.
• Payslips and records: a payslip for every employee and a run history showing who computed, approved and paid.

PAYE in 2026: the Nigeria Tax Act 2025 bands

The Nigeria Tax Act 2025 took effect on 1 January 2026 and replaced the Personal Income Tax Act bands that schools had used since 2011. Two changes matter for a bursar: the bands are wider and start at zero, and the Consolidated Relief Allowance (CRA) is gone. Pension, NHF, NHIS and life assurance contributions remain deductible before tax, and a new rent relief of 20% of annual rent paid, capped at ₦500,000, replaces the CRA.

Worked example. A teacher earns ₦150,000 a month, or ₦1,800,000 a year, pays 8% pension (₦144,000 a year) and declares annual rent of ₦600,000, giving rent relief of ₦120,000. Chargeable income is ₦1,800,000 less ₦144,000 less ₦120,000, which is ₦1,536,000. The first ₦800,000 is taxed at 0% and the remaining ₦736,000 at 15%, so annual PAYE is ₦110,400, or ₦9,200 a month. Under the old PITA bands the same teacher would have paid more, because the first naira was taxed at 7% after a smaller relief.

For pay periods before January 2026 the old rules still apply: PITA bands of 7%, 11%, 15%, 19%, 21% and 24%, the CRA of ₦200,000 or 1% of gross (whichever is higher) plus 20% of gross, a minimum tax of 1% of gross, and an exemption for anyone earning at or below the national minimum wage of ₦70,000 a month. Safeticha keeps both rulesets and applies the right one by pay date, so an old payslip can always be reproduced.

Pension, NHF, NHIS, NSITF and ITF

Pension, NHF and NHIS are deducted before PAYE is calculated, which lowers the tax. NSITF and ITF are employer costs and never appear on the payslip as deductions. A good payroll tool lets you switch each of these on or off for your school and set the rate, because not every school is registered for all of them.

The payroll month, step by step

1. Confirm the staff list. Who joined, who left, who changed salary. Mid-month starters and leavers are paid pro-rata for the days worked.
2. Add adjustments. Bonuses, arrears, deductions for unapproved absence, and this month's loan or advance repayments.
3. Compute. Gross pay, each deduction, PAYE and net for every employee.
4. Review and approve. The bursar checks totals; the proprietor or head approves. Nothing is paid before approval.
5. Pay. Upload a bank transfer file to the school's bank, or pay by transfer, then mark the run paid.
6. Issue payslips and remit. Send payslips to staff, then remit PAYE to the state and pension to each employee's PFA by the statutory deadlines.

What a correct payslip shows

A payslip should let a teacher check their own pay without asking the bursar. At minimum it shows the pay period and pay date, the employee's name and number, each earning line, each deduction line including PAYE and pension, the employer's own contributions for information, net pay, the bank account paid, and year-to-date totals. Safeticha's payslips are PDFs with the school's logo, emailed to staff and available in the staff app, and the school chooses whether they go out automatically when a run is paid or after the bursar has previewed them.

Common payroll mistakes in schools

• Still using the 2011 PITA bands in 2026. Every employee is over-taxed from January onward.
• Deducting NHF from staff who are not registered. Money leaves the payslip and never reaches the Federal Mortgage Bank.
• Paying a mid-month starter a full month. Or the reverse, docking a full month for a few days.
• Forgetting that an advance is a loan. Without a repayment schedule it quietly becomes a gift.
• No approval step. One person computes and pays, and nobody checks.

Spreadsheet or payroll software?

A spreadsheet works for a staff of five who all earn fixed salaries. It stops working the month a teacher starts on the 14th, two staff take advances, and the tax rules change. Payroll software that is part of the school management system goes further than a standalone payroll tool, because the staff records, roles and bank details already exist: enrolling a teacher into payroll is a click, not a form.

Safeticha's payroll is included in every school plan. It applies the 2026 tax rules and the older PITA rules by pay date, handles pension, NHF, NHIS, NSITF and ITF with switchable rates, pro-rates starters and leavers, runs loans and advances, separates compute, approval and payment, exports a bank transfer file, and sends PDF payslips automatically or after a preview. Read more on the school payroll software page, or see how it fits with fees management and the rest of the school management system.

Frequently asked questions

Is PAYE remitted to the federal or the state government?

To the internal revenue service of the state where the employee lives, by the 10th of the following month. A Lagos teacher's PAYE goes to the Lagos State Internal Revenue Service even if the school is registered elsewhere.

Do small schools have to run pension?

The Pension Reform Act makes it mandatory for employers with three or more employees. Smaller schools can contribute voluntarily, and many do because it helps retain teachers.

Can part-time teachers be on payroll?

Yes. Part-time staff are paid for the sessions or days they teach, with PAYE calculated on what they actually earn. In Safeticha they are a part-time employment type with their own salary lines.

What changed for payslips in 2026?

Nothing in law, but the tax line will be lower for most staff under the new bands, and the CRA line disappears. A payslip for January 2026 onward should show rent relief where the employee has declared rent.