Missing your PAYE deadline costs 10% of the unpaid amount plus Central Bank interest — immediately. [SOURCE: NTA 2025] For a business with ₦150,000 monthly PAYE, that’s ₦15,000 penalty plus interest from day one.
The new Nigeria Tax Act 2025 made late PAYE remittance penalty Nigeria rules stricter. Here’s exactly what you’ll pay and how to avoid it.
What You’ll Need
To calculate your penalty:
- Monthly PAYE amount
- Days overdue
- Current CBN monetary policy rate (14.5% as of April 2026)
To fix late payments:
- Outstanding PAYE amount: ₦X
- Penalty calculation: 10% of unpaid amount
- Interest: CBN rate pro-rated daily
- Total cost: Often 15-25% more than original amount
Timeline: Penalties apply immediately after the 10th of the month
Understanding Late PAYE Remittance Penalty Nigeria Rules
PAYE must be remitted by the 10th of the following month. Pay March salaries? PAYE is due April 10th. No exceptions.
Pro tip: Set up remittance for the 8th. Banks can delay transfers, and “technical issues” aren’t valid excuses under NTA 2025.
The Federal Inland Revenue Service (FIRS) provides detailed guidelines on tax obligations and compliance requirements for businesses operating in Nigeria. Understanding these requirements is crucial for avoiding penalties and maintaining good standing with tax authorities.
Exact Penalty Costs Under NTA 2025
| Violation | Penalty | Source |
|---|---|---|
| Late PAYE remittance | 10% of unpaid amount + CBN interest rate | NTA 2025 |
| Late annual return filing | ₦50,000 + ₦25,000 per day continued default | NTA 2025 |
| Failure to withhold PAYE | Up to ₦5,000,000 fine | NTA 2025 |
| Under-deduction of PAYE | Employer pays shortfall + 10% penalty | NTA 2025 |
Real cost example: Your 10-person team generates ₦150,000 monthly PAYE. Miss the deadline by 30 days:
- Base penalty: ₦15,000 (10%)
- Interest: ₦1,813 (14.5% CBN rate, 30 days)
- Total extra cost: ₦16,813
Or skip the stress — Lint Payroll handles remittance automatically for ₦500 per employee.
Step-by-Step: Calculating Your Late PAYE Penalty
Step 1: Calculate Base Penalty
Base penalty = 10% × Outstanding PAYE amount
Example: ₦150,000 overdue PAYE = ₦15,000 base penalty
Step 2: Calculate Daily Interest
Daily interest = (CBN rate ÷ 365) × Outstanding amount × Days overdue
Current CBN rate: 14.5% (as of April 2026)
Step 3: Pay Through Your State IRS
Lagos businesses: LIRS portal
Abuja: FCT-IRS
Other states: Contact your state Internal Revenue Service
Common mistake: Don’t pay penalties to FIRS. PAYE goes to your state IRS, not federal.
Cost Breakdown: How Much You’ll Actually Pay
Here’s what late PAYE remittance penalty Nigeria costs for different delay periods:
| Monthly PAYE | 1 Month Late | 3 Months Late | 6 Months Late |
|---|---|---|---|
| ₦50,000 | ₦5,604 | ₦6,813 | ₦8,625 |
| ₦150,000 | ₦16,813 | ₦20,438 | ₦25,875 |
| ₦300,000 | ₦33,625 | ₦40,875 | ₦51,750 |
| ₦500,000 | ₦56,042 | ₦68,125 | ₦86,250 |
Calculations based on 10% penalty + 14.5% CBN interest rate
The math is brutal. Three months late on ₦300,000 PAYE? You’re paying ₦40,875 extra — enough to hire another employee for two months.
Common Mistakes That Trigger Penalties
1. Mixing Up Federal vs State Remittance
PAYE goes to your state IRS, not FIRS. Lagos State Inland Revenue Service (LIRS) for Lagos businesses, FCT-IRS for Abuja, etc.
2. Wrong Computation Under NTA 2025
The old Consolidated Relief Allowance is gone. First ₦800,000 of annual income is now tax-free. Using old PITA calculations triggers under-deduction penalties.
For detailed guidance on PAYE calculations and compliance, businesses can reference the official Nigeria Tax Act 2025 documentation which provides complete information about current tax obligations and penalty structures.
3. Ignoring the 7-Day Pension Rule
Pension contributions are due within 7 working days of salary payment — not month-end. Mix this up and you’ll face PenCom sanctions plus PAYE complications.
4. Manual Processes During Month-End Chaos
Month-end is when businesses mess up deadlines. Too many moving parts, too little time. Automation eliminates this risk entirely.
5. Not Setting Up Backup Payment Methods
Your primary business account is frozen? You still owe PAYE by the 10th. Have backup payment methods ready.
Frequently Asked Questions
Q: Can I negotiate late PAYE penalties?
A: Penalties under NTA 2025 are automatic. Some state IRS offices offer payment plans for the penalty amount, but the 10% + interest applies regardless.
Q: What if my bank delayed the transfer?
A: Bank delays aren’t valid excuses under NTA 2025. The law expects you to account for processing time. Always remit 2-3 days early.
Q: Do I pay penalties to FIRS or state IRS?
A: State IRS. PAYE is state tax. LIRS for Lagos, FCT-IRS for Abuja, etc. Paying FIRS by mistake doesn’t count as compliance.
Q: What’s the penalty for not filing the annual H1 return?
A: ₦50,000 initial penalty plus ₦25,000 for each day of continued default after March 31st. [SOURCE: NTA 2025]
Q: Can employees sue if I don’t remit their PAYE?
A: Yes. Employees can report non-remittance to their state IRS. You’ll face the original penalty plus potential criminal charges for tax evasion.
Q: How does Lint Payroll prevent these penalties?
A: Lint automatically calculates PAYE using 2026 NTA rates, generates remittance by the 8th of each month, and sends you confirmation. You never miss a deadline.
Why Most Businesses Miss PAYE Deadlines
Cash flow timing. You pay salaries on the 25th but PAYE is due by the 10th. That’s only 15 days to:
- Calculate each employee’s tax
- Generate remittance schedules
- Process bank transfers
- Handle any payment failures
Manual payroll during month-end chaos is where mistakes happen.
The solution isn’t better discipline. It’s better systems.
Lint Payroll calculates your team’s PAYE automatically using 2026 NTA 2025 rates, schedules remittance for the 8th of each month, and confirms successful payment. Your PAYE compliance runs on autopilot.
Best Practices for PAYE Compliance
To avoid late PAYE remittance penalties, implement these proven strategies:
1. Automated Remittance Systems: Set up automatic transfers that trigger 2-3 days before the deadline. This buffer accounts for banking delays and technical issues.
2. Monthly Reconciliation: Review your PAYE calculations monthly to catch discrepancies early. Under NTA 2025, employers are liable for any shortfalls plus penalties.
3. Employee Record Maintenance: Keep detailed records of salary adjustments, promotions, and tax relief claims. Accurate employee data is essential for correct PAYE computation.
4. Professional Payroll Management: Consider outsourcing payroll to certified providers who specialize in Nigerian tax compliance. The cost of professional service is typically far less than penalty exposure.
5. Regular Training: Ensure your finance team stays updated on tax law changes. The transition from PITA to NTA 2025 caught many businesses off-guard with outdated calculation methods.
These practices help businesses maintain consistent compliance and avoid the substantial costs associated with late remittance penalties under the current tax framework.
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Stop paying penalties for manual mistakes. Lint Payroll automates PAYE computation and remittance for ₦500 per employee. Never miss another deadline.
Written by the Lint team. Tax calculations verified against Nigeria Tax Act 2025. Last updated: April 6, 2026.
