Pension & Reliefs
Understanding tax reliefs and deductions
Consolidated Relief Allowance (CRA)
The CRA is a standard relief granted to all taxpayers. It's calculated as the higher of ₦200,000 or 1% of gross income, plus 20% of gross income. This relief is automatically applied to reduce your chargeable income.
Pension Contributions
Contributions to approved pension schemes are tax-deductible up to certain limits. The deduction reduces your chargeable income, effectively lowering your tax liability.
Key Points:
- Employee contributions: Up to 8% of salary
- Employer contributions: Up to 10% of salary
- Must be to an approved pension fund administrator (PFA)
Other Allowable Deductions
National Housing Fund (NHF)
2.5% of monthly income, up to ₦200,000 annually
National Health Insurance Scheme (NHIS)
Contributions to NHIS are tax-deductible
Life Assurance Premiums
Premiums paid on life assurance policies are deductible
How Reliefs Reduce Your Tax
All allowable deductions and reliefs are subtracted from your gross income to arrive at your chargeable income. Your tax is then calculated on this reduced amount, meaning reliefs directly reduce your tax liability.