Hiring your first employee: PAYE and NSSF basics
What changes for a business the month it starts paying salaries, and the two monthly deadlines to remember.
Taking on your first employee is a good sign for the business. It also means new obligations to two bodies: the Uganda Revenue Authority, for income tax on salaries, and the National Social Security Fund, for retirement savings.
PAYE: income tax on salaries
As an employer you deduct Pay As You Earn (PAYE) tax from each employee’s salary and pay it to URA. Income below a set monthly threshold is not taxed; above it, tax rises in bands. You file a PAYE return and pay the tax deducted by the 15th of the following month.
NSSF: social security
Employers register with NSSF and pay contributions for each employee every month. Currently the contribution is 15% of gross pay: 10% from the employer and 5% deducted from the employee. Contributions are also due by the 15th of the following month.
Set up before the first payday
- Collect each employee’s national ID, TIN and NSSF number, or help them get one.
- Agree gross pay in writing, in an appointment letter or contract.
- Decide who will calculate the deductions and file each month.
- Keep a payslip for every payment you make.
The cost of getting it wrong
Late PAYE and NSSF payments attract penalties, and deductions taken from staff but not paid over are treated seriously. A simple monthly routine prevents both.
Tax bands, thresholds and contribution rates are set by law and can change. We calculate payroll with the rates in force at the time.
We run payroll, PAYE and NSSF for small employers. See our payroll service.