Some of the core changes include:

• A new Nigeria Tax Act (NTA, 2025) that consolidates many older tax laws into a single statute. 

• A more progressive personal income tax (PIT) schedule, with new tax bands and reliefs.

• Expanded rules for residency and taxing global income for Nigerians who are residents. 

• Clarification around VAT, e-invoicing, fiscalisation, and full ability to claim input VAT (even on services and fixed assets). 

• A new Development Levy of 4% on company assessable profits (for companies not falling under the “small company” exemptions) that replaces several older levies. 

• For companies, changes to capital gains tax (CGT) (bringing CGT rate for companies in line with corporate tax) and rules for indirect share transfers. 

• The repeal of nuisance taxes and overlapping levies to reduce complexity. 

Importantly, many of these reforms will come into effect at different times — e.g. the personal income tax changes are expected to start January 1, 2026.

2. Why It Matters If You Use a Personal Account for Business

Many small-scale entrepreneurs, sole proprietors, or informal businesses use their personal bank accounts to receive payments from clients or customers. Under the new tax regime, that practice may attract more scrutiny, and you may face certain risks or burdens. Below are some effects you should watch out for:

a) Blurring the line between “personal” and “business” income

With the expanded scope of tax rules and enforcement, tax authorities may more carefully evaluate transactions in a personal account. Suppose you receive ₦1,000,000 in a month from sales or clients — that may more easily be seen as “income from trade or business,” rather than just “personal funds.” Under the new regime, that could be liable to personal income tax or other levies.

b) PIT changes and impact on taxable income

Under the new personal income tax bands (effective Jan 1, 2026) the schedule is:

• ₦0 – ₦800,000 → 0% (i.e. tax exempt)

• ₦800,001 – ₦3,000,000 → 15%

• ₦3,000,001 – ₦12,000,000 → 18%

• ₦12,000,001 – ₦25,000,000 → 21%

• ₦25,000,001 – ₦50,000,000 → 23%

• Above ₦50,000,000 → 25% 

So for example:

• If your business (through your personal account) makes ₦5,000,000 in a year, you may fall in the 18% bracket (or effective rate after deductions).

• If you make ₦15,000,000, some portion falls in the 21% bracket.

Since personal income tax now more clearly captures trade/business income, your net profit (income minus allowable expenses) is what’s taxed. If you’ve been mixing personal and business expenses, tax authorities may require clearer separation.

c) Elimination of Consolidated Relief Allowance (CRA) and introduction of Rent Relief

The new law removes the old Consolidated Relief Allowance (CRA), which many taxpayers used to reduce their taxable income. In its place, a Rent Relief system has been introduced — it is the lesser of 20% of the annual rent paid or ₦500,000. 

This can disadvantage persons who had no documented rent payments or those who live in properties without formal rent agreements—especially if much of their “business room” is within their living space.

d) VAT, input VAT, and e-invoicing

If your business is VAT-registered (or required to register), the new laws expand the ability to claim input VAT — even on services and fixed assets.

Also, the new rules require e-invoicing and “fiscalisation” of VAT transactions — meaning real-time reporting of sales and invoices in prescribed formats. 

If you're doing business via your personal account, issuing invoices (especially digital ones) may become more important to validate that your receipts are legitimate business transactions, not just personal transfers.

e) Increased audit risk and compliance requirement

Because of the more integrated and digitized tax system, there is a higher chance your account income may be flagged for review if there are frequent, large business-like inflows. It’s important to:

• Keep clear records (invoices, receipts)

• Separate business receipts from personal income

• Use proper accounting or bookkeeping systems

• Possibly migrate to a dedicated business account

f) Example: What if you run a small business through your personal account?

Let’s run a hypothetical:

• You receive ₦200,000 monthly from clients → ₦2,400,000 per year

• You incur ₦400,000 in business expenses (internet, transport, materials)

• Net profit = ₦2,000,000

Under the new PIT scheme, your income falls in the ₦800,001 – ₦3,000,000 band → 15% tax rate. So your tax liability = 15% of ₦2,000,000 = ₦300,000 (with adjustments for allowable deductions).

Now, if you had instead used a formal business structure (e.g., registered company or business name) and had a business account, you might avoid ambiguity in classification of income. Also, for small companies (turnover ≤ ₦100 million and fixed assets ≤ ₦250 million), there is an exemption from corporate income tax, CGT, and the new development levy. 

So, if your revenues grow, migrating to a business account or entity might become beneficial.

3. What You Should Do Now: Tips & Best Practices

Here are practical steps to help you adapt:

1. Open a separate business account
   Don’t mix business and personal cash flows. Use a designated account so that tax authorities see a clear distinction.

2. Keep good records & receipts
   Document sales, expenses, invoices, digital payments. If authorities request proof, you’ll be prepared.

3. Issue formal invoices
   Whether you’re selling a service, product, or doing freelance work — issue invoices that comply with your industry norms. As e-invoicing becomes mandatory, having structured invoices helps.

4. Understand allowable deductions
   Only expenses “wholly and exclusively incurred” in generating business income qualify. Avoid claiming personal expenses. 

5. Track rent payments (if applicable)
   Since “rent relief” is now a formal deduction, ensure you have documents or proof of rent payments where applicable.

6. Plan your tax strategy early
   As your business grows, consider registering a business name or LLC, using business accounting software, and hiring a tax adviser to optimize your tax position.

7. Stay updated
   Because these reforms roll out in phases, keep an eye on government announcements, official tax guidelines, and implementation timelines.

4. Final Thoughts

The 2025 tax reform in Nigeria marks a major shift, especially for individuals and small entrepreneurs operating informally. While the new rules bring opportunities (e.g., clarity, modernization, input VAT, defined reliefs), they also heighten expectations regarding recordkeeping, compliance, and clear separation of personal and business finances.

If you’re using your personal account for business, now is a critical time to rethink your setup. Transition to a business account, maintain sound bookkeeping, and proactively plan for growth.

Need help tailoring this to your business (or your clients)? I can help you create a guide or checklist specific to your model. Do you want me to draft one for your business type (e.g. e-commerce, consulting, services)?