Everything most people know about PAYE assumes an employer sits in the middle, deducting tax before the salary even lands. Freelancers, consultants and sole traders do not have that. Here is what actually happens instead.
Why nobody deducts PAYE for you
PAYE is a mechanism, not the tax itself. It only works because an employer sits between you and your income, withholding tax before paying you. Self-employment has no such middleman.
That does not mean self-employed income escapes tax. It means the mechanism for collecting it looks different, and the responsibility for getting it right sits more visibly with you.
Direct assessment, and who carries it out
Some states, including Rivers and Kaduna, call this process direct assessment, and it means what it sounds like: the tax authority assesses your income directly, rather than relying on a payroll system to have already done the sum. You declare what you earned, and the state works out what you owe.
Rivers State's own tax platform, RIVTAMIS, shows direct assessment in its dashboard, on the route to a tax clearance certificate request. Kaduna's KADIRS portal lists direct assessment among the payments it takes online, alongside PAYE and other tax types.
The authority that does this for you is the tax authority of the state where the employee lives, the same rule that decides an employee's tax authority. Self-employment changes the mechanism, not which state is in charge.
Registering with your state as an individual taxpayer
Every taxable person must register and get a Tax ID. For a self-employed person this should come first, before any return or assessment. Kaduna's and Delta's portals, for example, offer registration for a Tax ID or an S-TIN.
Skipping this step can stall a self-employed person's first attempt at filing, because a portal has nothing to attach a return to until registration exists.
What you can still claim against your income
Pension, National Housing Fund and NHIS contributions, life assurance premiums, interest on a loan to build a home you live in, and rent relief. None of this is exclusive to employees. A self-employed person can claim the same categories, provided the claim is backed by evidence: a tenancy agreement for rent relief, or contribution statements for pension.
What is different is that nobody in payroll is applying these for you automatically. You have to know they exist and make the claim yourself when you file.
Filing your own return every year
Registration and assessment are not a one-off. Every taxable person must file a return each year, even if no tax is due, and that applies to the self-employed exactly as it applies to an employee. Our guide to filing your individual annual return covers the deadline and what to have ready.
The bands themselves, once your taxable income is worked out, are the same ladder used everywhere else in this series. See how the bands apply to freelancers for a full worked example, or the PAYE and state tax hub for the rest of the series.