What actually changed
The consolidated relief allowance was removed. It used to take a fixed slice off everyone's income before tax was calculated, whatever their circumstances. In its place is rent relief: 20% of the rent you actually pay, capped at ₦500,000 a year, and only if you pay rent.
The bands were rewritten at the same time. The first ₦800,000 of chargeable income is taxed at 0%. For a lot of employees, once the 8% pension contribution comes off, that means no PAYE at all.
How the bands are applied
Each rate applies only to the slice of income inside its band. Someone whose chargeable income reaches into the 18% band pays 0% on the first ₦800,000, 15% on the next slice, and 18% only on what sits above ₦3,000,000.
This is why a raise never leaves anyone worse off. It is also why an 'effective rate' is always lower than the top band someone reaches.
What comes off before tax
The employee's pension contribution of 8%, the National Housing Fund contribution of 2.5% where it applies, and rent relief. What is left is chargeable income, and the bands apply to that.
The employer's own pension contribution of 10% is a cost to the business, not a deduction from the employee. It does not appear on the payslip as a deduction and it does not reduce the employee's tax.
What an employer still has to do
Deduct PAYE monthly and remit it to the relevant state revenue service by the deadline. File annual returns in January. Keep records that let you show your working.
Smilelink calculates the figures and prepares the schedules grouped the way the authorities want them. It does not remit for you and it never holds your tax money.
Where people get it wrong
Calculating on basic pay rather than total emoluments. PAYE is worked out on the whole package — allowances, bonuses and the rest — not on the line labelled 'basic'.
Claiming rent relief without paying rent. It is a relief for an actual expense, and it is checkable.