The PAYE bands are not actually a "PAYE" thing at all. They are the personal income tax bands, and PAYE is just one way of collecting the tax they produce. A freelancer's income is taxed on the same ladder.
Why the same ladder applies whether or not you are on payroll
Even chargeable gains for an individual are taxed at the individual's income tax rates of 0% to 25%, one sign of how consistently the Fourth Schedule bands apply across different kinds of income, not just salaries. The bands in force since 1 Jan 2026 do not ask where the money came from.
What changes for a self-employed person is who does the sum and when. An employer's payroll software applies the bands every month automatically. A freelancer or sole trader applies them once a year, to a full year's income, through their state's own assessment process.
A worked example on a self-employed income
Take a sole trader with ₦4,800,000 in assessable income for the year, and no documented pension contribution to deduct first.
Applying the bands directly to that figure:
- First ₦800,000: nothing.
- Next slice, taxed at 15% on income from ₦800,001 to ₦3 million: ₦2,200,000, the whole of that band, comes to ₦330,000.
- Remaining ₦1,800,000, taxed at 18% on income from ₦3 million to ₦12 million: ₦324,000.
Add the two taxed slices together and the tax for the year comes to ₦654,000, or roughly ₦54,500 spread evenly across twelve months, even though nothing is actually deducted monthly for a self-employed person in the way PAYE deducts it from a salary.
Reading the total against a full year, not a month
A common mistake is treating a good month as if it were the whole year's rate. A freelancer with a strong single month of ₦800,000 has not necessarily crossed into a higher band for the year; what matters is the full year's assessable income added together, the same way this example did.
This is also why the bands work on a year's income, not a single invoice or a single month's bank statement.
What this example leaves out
This example applies the bands to a flat figure with no deductions beyond the tax-free slice everyone gets. It does not apply rent relief, pension or any other deduction from the eligible list, and it says nothing about what counts as a deductible business expense before you even reach the personal income tax bands, which is a separate question from this one.
A real self-employed return will look different once those are added in. Deductions can only lower the taxable figure, not raise it.
Where to check the bands on their own
For the ladder without any example attached, see the 2026 PAYE bands explained. For how assessment itself works if you are self-employed, see personal income tax for the self-employed, and browse the rest of the series from the PAYE and state tax hub.