Payroll is where small compliance failures compound fastest. Get a VAT return wrong and you fix it next period. Get payroll wrong and you have understated deductions across every employee, every pay run, for however long the error has been running — plus interest, plus penalties, plus a difficult conversation with staff whose net pay is about to change.
Three deductions apply to employees in Trinidad and Tobago. They are governed by different legislation, calculated differently and remitted to different bodies. Here is each one.
1. PAYE — income tax deducted at source
Every employer must deduct income tax from emoluments and remit it to the Board of Inland Revenue. The calculation follows the individual income tax structure: a personal allowance of TT$90,000, then 25% on chargeable income up to TT$1,000,000 and 30% above.
The mechanism runs through the TD-1. Each employee completes this declaration of emoluments and claims, which tells you which allowances and deductions to apply — the personal allowance, approved annuity or pension contributions, tertiary education expenses, and so on. Without a TD-1 on file you must deduct on the basis of the personal allowance only.
Three practical rules:
- Get a fresh TD-1 from every employee at the start of each year and whenever circumstances change.
- An employee's claim for a deduction requiring approval — an annuity, for instance — needs the approval to be in place. You are relying on their declaration; keep it on file.
- Employees with second jobs commonly end up under-deducted. Flag it rather than discover it at year end.
2. National Insurance — and the 2026 increase
National Insurance contributions are payable to the National Insurance Board on insurable earnings, split between employer and employee. Contributions are not a percentage applied to each salary individually — earnings fall into earnings classes, each with a fixed weekly or monthly contribution.
The headline change: the combined contribution rate rose to 16.2% of insurable earnings with effect from 5 January 2026, shared roughly one-third to the employee and two-thirds to the employer — approximately 5.4% employee and 10.8% employer. A further increase to 19.2% is scheduled for January 2027. Maximum insurable earnings are capped, with the top earnings class covering earnings above the ceiling.
What this means in practice:
- Your employment cost rose in January 2026 and will rise again in January 2027. If your pricing has not been revisited since, your margins have absorbed it silently.
- Employees saw net pay fall in the first January pay run. Explaining why — it buys sickness, maternity, injury, invalidity, retirement and survivors' benefits — is worth doing before someone assumes a payroll error.
- Your payroll software must be on the current earnings class table. Software running last year's tables produces confidently wrong numbers.
Registration is compulsory. Every employer must register with the NIB, and every employee must be registered and issued an NI number. Contributions for a genuine employee are not optional, and labelling someone a "contractor" does not remove the obligation if the substance of the relationship is employment.
3. Health surcharge
The simplest of the three. Health surcharge is deducted from employees at one of two flat weekly rates:
- TT$8.25 per week where monthly emoluments exceed TT$469.99 (or weekly emoluments exceed TT$109.00)
- TT$4.80 per week for all other employed persons
Three categories are exempt: employees under 16, employees aged 60 and over, and persons whose only source of income is a pension.
The remittance deadline
PAYE and health surcharge deducted in a month must reach the Board of Inland Revenue by the 15th of the following month. NIS contributions follow the NIB's own monthly deadline. Late remittance attracts penalties and interest — and because you are remitting money already deducted from employees' pay, it is treated seriously.
Year-end obligations
After the year closes you must issue each employee a TD-4 certificate showing total emoluments, PAYE deducted, NIS and health surcharge. Employees need it to file their own returns. You also file the annual employer return summarising all deductions. Do not leave TD-4s to April — the information is in your payroll records and the certificates should be issued promptly.
The classification question
The most expensive payroll error in Trinidad is not arithmetic; it is treating employees as independent contractors. If a person works set hours, uses your equipment, is directed by you, works only for you and is integrated into your operation, they are an employee — whatever the contract says. A reclassification assessment covering several years of PAYE, NIS and health surcharge, with interest, has ended otherwise sound small businesses.
If you are unsure about a particular arrangement, get it reviewed before it becomes a five-year exposure rather than a one-month question.
A monthly payroll checklist
- Confirm gross pay, overtime and any taxable benefits for each employee
- Apply TD-1 claims and compute PAYE
- Determine each employee's NIS earnings class using the current table and compute employer and employee contributions
- Apply the correct health surcharge rate
- Issue payslips showing every deduction separately
- Remit PAYE and health surcharge by the 15th; remit NIS by the NIB deadline
- File the remittance evidence with the payroll register for the month
Done every month, payroll is routine. Done at year end, it is an emergency.
General information only. This article sets out general information about accounting, taxation and insurance matters in Trinidad and Tobago as understood at the date of publication. Rates, thresholds, forms and filing procedures change, and the right treatment depends on your particular circumstances. It is not accounting, tax, legal or financial advice and should not be relied on as a substitute for professional consultation. Please confirm current requirements with the Inland Revenue Division, the National Insurance Board, your insurer or regulator as applicable — or speak with us before acting.