Housing costs take up a significant share of household income in Nigeria. The Nigeria Tax Act, 2025 (NTA) responded to this with a new personal income tax deduction called the Rent Relief Allowance (RRA), which replaced the former Consolidated Relief Allowance (CRA) from January 2026.
Unlike the CRA, which applied to every taxpayer regardless of housing status, the RRA is targeted: it benefits only people who actually pay rent. This article explains how it works and what is needed to claim it.
How it works
Under Section 30(2)(a)(vi) of the NTA, an individual subject to personal income tax may deduct rent relief equal to 20% of annual rent paid, capped at ₦500,000, whichever is lower, when computing chargeable income.
Example from published guidance: an individual paying ₦3,000,000 in annual rent would ordinarily be entitled to a 20% deduction of ₦600,000. Because this exceeds the cap, the deductible amount is limited to ₦500,000.
The Joint Revenue Board's Personal Income Tax Guidelines, issued 7 April 2026, add practical detail:
- Actual rent paid, and other prescribed information, must be accurately declared to the relevant tax authority.
- Tenants of jointly rented properties may each claim relief on the portion of rent they actually bear, up to the ₦500,000 cap.
- Relief is applied on an actual-year basis tied to rent paid in that year.
Who qualifies
- Tenants, whether employees under PAYE or self-employed individuals assessed directly, may claim the relief.
- Homeowners and individuals with no rental obligation are excluded, since the relief is tied to rent actually incurred.
- The relief applies to rent paid for residential accommodation for the individual or their family.
Why this matters to taxpayers
For an employee, rent relief reduces chargeable income before PAYE is calculated, which can lower the tax withheld from salary. For a self-employed person, it reduces the income on which personal income tax is assessed. Because the relief is not automatic, a taxpayer who does not disclose their rent may simply not receive it.
Tax implications
- The relief lowers chargeable income, not the tax rate itself, so its value depends on which tax band the taxpayer falls into.
- Under-declared or undocumented rent cannot support a claim if queried.
- Employers processing PAYE need accurate rent information from staff to apply the relief correctly; where this is not submitted, the employee may need to claim any shortfall directly.
- The relief interacts with other deductions (pension, NHF, NHIS contributions), all of which reduce chargeable income before the tax bands are applied.
Step by step: how to claim rent relief
- Confirm you are a tenant. Homeowners do not qualify.
- Gather evidence. Keep your tenancy agreement, rent receipts and bank transfer records showing the rent paid.
- Calculate 20% of your annual rent.
- Compare against the ₦500,000 cap and apply the lower figure.
- If renting jointly, calculate relief only on the portion of rent you personally paid.
- Declare the rent accurately to your employer (for PAYE purposes) or to the relevant tax authority (if self-employed).
- Retain your records for the year, in case of a query from the tax authority.
Why engage a professional consulting firm
- Correct computation. A professional can confirm the relief is calculated correctly, particularly for jointly rented properties or partial-year tenancies.
- Documentation review. An accountant can advise on what evidence is acceptable to support a claim.
- Payroll coordination. For employers, a firm can help build rent declarations into payroll processes so PAYE reflects the relief correctly.
- Avoiding double claims or omissions across multiple income sources.
Why every taxpayer should comply
Claiming reliefs accurately, with proper documentation, is part of complying with the tax law, not a way around it. Overstated claims can be queried and reversed, with penalties and interest where applicable. Accurate, supported claims protect the taxpayer if records are reviewed later.
Tips on the relief and other opportunities
- Keep rent receipts and lease agreements in one folder for each tax year.
- Where accommodation is shared, agree in writing on each tenant's share of the rent, to support individual claims.
- Combine rent relief with other eligible deductions — pension, NHF and NHIS contributions — when computing chargeable income.
- Review your rent relief declaration annually, since rent amounts and tenancy terms can change.
Relevant law
- Nigeria Tax Act, 2025, Section 30(2)(a)(vi) and the Schedules to Section 58
- Joint Revenue Board Personal Income Tax Guidelines, 7 April 2026
Frequently asked questions
Can homeowners claim rent relief? No. The relief applies only to individuals who pay rent for residential accommodation.
What is the maximum rent relief I can claim? 20% of annual rent paid, capped at ₦500,000, whichever is lower.
Do I need to submit proof of rent paid? Published guidance requires that rent paid be accurately declared, and supporting records should be retained.
Can two people sharing a flat both claim relief? Guidelines state that tenants of jointly rented property may each claim relief on the portion of rent they bear, up to the cap.
Is rent relief automatic? No. It depends on accurate declaration of rent paid to the employer or tax authority.
Where you need further assistance: You may contact US & CO. (Chartered Accountant), a professional tax consulting firm in Lagos, Nigeria. 📞 WhatsApp: 08056219998 📧 Email: info@usc.com.ng 🌐 Website: https://www.usc.com.ng
Footnote: This article is for general information only. It is not complete investment, tax or legal advice. Readers should consult a qualified professional and confirm current requirements with the relevant tax authority before making any investment or tax decision.
