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How PAYE works for domestic staff and small employers

PAYE for domestic staff and small employers: when it applies to a small payroll, who has to register, and what a household or small firm still owes.

2 min readBy the Docufy editorial team

Quick answer

PAYE applies the same way whether an employer is a large company or a household with one member of staff: deduct tax on pay above ₦800,000 a year, and remit it monthly. Registration steps for a small or household employer are worth confirming with your state's tax authority directly.

Tax-free amount
₦800,000 a year
Applies to
Any employer, including households
Remit by
the 10th day of the following month
Confirm registration with
Your state's tax authority
On this page

PAYE does not have a separate, smaller version for a small employer or a household. The same bands, the same tax-free amount, and the same monthly remittance apply, whether the payroll has one person on it or a thousand.

What differs in practice is how consistently it gets applied, since a household or a very small firm is less likely to have a dedicated payroll system.

The short version

Size does not matter here. Pay above the line gets taxed. Pay below it does not. The steps are the same for everyone.

When PAYE applies to a small or household payroll

If pay for the year is above ₦800,000, the excess is taxable, following the same bands as any other salary. Below that line, there is nothing to deduct.

Many household arrangements, such as paying a driver or a nanny, sit at modest monthly amounts. Whether a specific arrangement crosses the tax-free line for the year is worth checking directly, the same way how to calculate PAYE sets out for any salary.

Registering as a small or household employer

This guide does not have a verified, simplified registration process specific to small or household employers. The safest step is to contact the state tax authority covering where the employee lives, and ask what registration a small payroll needs.

Treating an informal arrangement as exempt from any obligation, without checking, is the riskiest assumption a small employer can make. When in doubt, ask first. It costs nothing and settles the question.

Remitting and filing on the same schedule

Once registered, the same two dates apply as to any employer: the 10th day of the following month for the monthly remittance, and 31 January for the annual PAYE return. Nothing about being small changes either date.

Common mistakes small employers make

  • Assuming PAYE only applies to registered companies, not individuals employing staff directly.
  • Paying a salary in cash with no record, making it harder to establish what was actually paid if ever asked.
  • Registering late, after a staff member's pay has already crossed the tax-free line for the year.

Where this fits with wider compliance

A small business that keeps PAYE current is in a stronger position if it later needs a federal tax clearance certificate, issued by the Nigeria Revenue Service (NRS), formerly FIRS, for a tender, a loan, or a licence renewal. That certificate is separate from PAYE itself, but a clean PAYE record makes it easier to apply for.

Domestic and small employers are not usually the first to think about a tax clearance certificate, since it is more often associated with registered companies. Once a small business grows past its early stage, though, the same certificate can become a routine requirement, and the PAYE habits built early are what make it straightforward to obtain later.

For the full series this sits in, see the PAYE and state tax hub.

Questions people ask

Does a household employing one driver or nanny need to worry about PAYE?

The same principle applies: if the pay is above ₦800,000 a year, PAYE is due on the excess. In practice, many informal household arrangements pay below that line, or are not formally registered as an employment at all.

Do small employers get a simpler PAYE process?

This guide does not have a verified simplified process specific to small or household employers, so the safest approach is to follow the same bands and deadlines as any employer, and confirm with your state's tax authority whether anything simpler applies.

Where does a small employer register to remit PAYE?

With the state tax authority covering where the employee lives. Contact details and registration steps vary by state, so this is worth confirming directly rather than assuming.

What if a small business also needs a tax clearance certificate?

Being current on PAYE and other filings supports a tax clearance certificate application, which is often asked for in tenders and loan applications.

Sources

Last checked 27 Sep 2026. Fees and rules change; the agency that issues the document has the final word. See our editorial policy.

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