PAYE threshold now UGX 335,000: a payroll checklist for employers
Uganda's monthly PAYE tax-free threshold rose from UGX 235,000 to UGX 335,000 on 1 July 2026. How to check September payslips, NSSF and the 15th deadline.
The Income Tax (Amendment) Act 2026 took effect on 1 July 2026 and raised the monthly tax-free PAYE threshold from UGX 235,000 to UGX 335,000. The Independent reported that the previous threshold had stood since 2012, so for many small employers this is the first PAYE change their payroll has ever had to absorb. Three payrolls have now run under the new rules. This is a checklist for making sure yours did it correctly, and for tidying up if it did not.
The new bands
The EY alert on the Acts sets out the annual bands: nil on chargeable income up to UGX 4.02 million; 20 percent on the portion between UGX 4.02 million and UGX 4.92 million; UGX 180,000 plus 25 percent on the portion between UGX 4.92 million and UGX 5.82 million; and UGX 405,000 plus 30 percent on income above UGX 5.82 million, with the additional 10 percent on income above UGX 120 million a year retained. In monthly terms the threshold is UGX 335,000, the next band runs to UGX 410,000 and the following band to UGX 485,000.
Early coverage, including The Independent's own calculator, applied 10 percent to the first taxable band, whereas URA's published rates now show 20 percent. Do not rely on a calculator you found online. Take the bands from the gazetted Act or from URA, and check that your payroll software has been updated to match them.
Check the September payslips
Pick three employees: one earning below UGX 335,000, one between UGX 335,000 and UGX 485,000, and one well above. For each, confirm:
- Gross pay, allowances and benefits are the figures in the contract.
- The NSSF employee deduction is 5 percent of gross.
- PAYE is calculated on chargeable income using the new bands.
- Local service tax, where applicable, has been deducted in the right month.
- Net pay on the payslip equals what was actually transferred.
If the person below UGX 335,000 is still showing PAYE, the threshold has not been updated. If the middle earner's PAYE is the same as in June, the bands have not been updated.
NSSF has not changed
NSSF Uganda's membership page is unambiguous: the employer deducts 5 percent of the employee's total gross monthly wage and adds 10 percent, a total contribution of 15 percent per employee, and contributions must be paid by the 15th day of the following month. The Fund covers all employers irrespective of the number of employees, for staff aged 16 to 55, except those under the government pension scheme. The PAYE change does not alter any of this, but a payroll that was edited by hand in July is a payroll where the NSSF line is worth checking too.
The 15th of the month
URA lists PAYE among the monthly returns due on the 15th day of the month following the return period, alongside VAT, withholding tax and local excise duty. NSSF falls on the same date. For a small employer that is one working day, once a month, when two statutory payments go out together; put it in the calendar for October, November and December now, because the December deadline falls in the holiday fortnight.
Explaining the change to staff
The Independent quoted an adviser saying every PAYE payer will pay a bit less: not a large amount, but some relief. Staff will notice a small rise in net pay from July, and a few will ask why their colleague's rise was different. A one-paragraph note with the new threshold and bands, pinned where payslips are collected or sent with them, answers the question once.
If July or August were wrong
Where too much PAYE was deducted, refund the difference through the next payroll and show it as a separate line. Where too little was deducted, speak to your accountant about correcting the return; URA's late-filing penalty is UGX 200,000 or 2 percent of the tax for the period, whichever is higher, and an honest correction is cheaper than an assessment. Keep the corrected payslips and the working with the year's payroll file.
A small employer's monthly routine
Lock attendance and leave by the last working day. Run payroll with the current bands. Check three payslips. Pay staff. Pay PAYE and NSSF by the 15th. File the PAYE return. Keep the acknowledgement. Six steps, every month, and the next change in the law is a settings update rather than a crisis.
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