Rent relief is the clearest replacement for the old consolidated relief allowance. Abolished from 1 January 2026, and this is the relief most likely to affect a typical employee's PAYE now.
20% of annual rent paid, capped at ₦500,000. Unlike the old allowance, it is not automatic; it needs documented rent behind it.
What rent relief is worth
20% of annual rent paid, capped at ₦500,000. The cap matters most for higher rents, where 20% of the actual amount paid would otherwise exceed it.
What counts as documented rent
The relief is described as needing proof that rent was actually paid, rather than an estimate. Beyond that, this guide does not specify an exact list of acceptable documents, since the registry behind it does not carry one. A tenancy agreement and payment receipts are the obvious starting point; confirm the exact requirement with your employer's payroll team or a tax adviser before relying on it.
How to claim it, step by step
- Gather your tenancy agreement and proof of the rent actually paid for the year.
- Give these to your employer's payroll team, since PAYE is deducted and remitted by the employer.
- Confirm with payroll or a tax adviser how they want the figure presented, since this can vary by employer until standard practice settles.
- Check a later payslip to see the relief reflected in a lower taxable amount.
A worked example of the effect
Take a yearly gross salary of ₦6,000,000, with an 8% pension contribution taken off first, the same as the ₦500,000-a-month example in this series. That leaves ₦5,520,000 before any rent relief, and a PAYE bill of ₦783,600 a year with no rent relief applied.
Now add documented rent of ₦1,200,000 a year. Twenty percent of that rent is ₦240,000, which is below ₦500,000, so the full ₦240,000 counts as relief. Taxable income drops further, to ₦5,280,000, and PAYE for the year comes to ₦740,400, a saving of ₦43,200 over the same salary with no rent relief.
Take a higher rent of ₦3,000,000 a year on the same salary instead. Twenty percent of that would be ₦600,000, but the relief is capped at ₦500,000, so only ₦500,000 counts. Taxable income comes to ₦5,020,000, and PAYE for the year comes to ₦693,600.
In every case, pension and rent relief both lower the income the bands see; neither changes the bands or rates themselves.
Why the relief is capped at all
A cap keeps the relief targeted at ordinary rent rather than scaling without limit for very high rents. Someone paying a modest rent gets the full 20% of it back as relief; someone paying a very high rent still benefits, but only up to ₦500,000.
This is a different shape from the old consolidated relief allowance, which applied more broadly regardless of any single cost like rent. Abolished from 1 January 2026, and rent relief is the named replacement most likely to affect an ordinary employee's PAYE now.
Common mistakes claiming it
- Assuming the relief applies automatically, the way the old allowance did.
- Estimating rent instead of using the actual documented amount.
- Forgetting the cap when rent is high, and expecting the full 20% to count regardless.
For how the bands work once relief has reduced your taxable income, see how PAYE is calculated step by step, or run the numbers directly in the PAYE calculator. The rest of this series sits in the PAYE and state tax hub.