PAYE for Employers: Registration, Calculations and Submissions
Pay As You Earn (PAYE) is the system under which employers deduct income tax from employees salaries and remit it to SARS on their behalf. Employers must also account for the Unemployment Insurance Fund (UIF) and Skills Development Levy (SDL) contributions. This guide covers everything an employer needs to know.
PAYE Registration for Employers
You must register as an employer with SARS for PAYE before you pay your first employee. Registration is done through eFiling.
Once registered, SARS will issue you an employer PAYE reference number (a 10-digit number starting with 7). This number must appear on all payroll submissions and employee IRP5 certificates.
- Log in to www.sarsefiling.co.za.
- Navigate to Home > Tax Types > Register New.
- Select Employees Tax (PAYE) and follow the registration steps.
- Also register for UIF and SDL at the same time if applicable.
- Upload the required documents: company registration, banking details and proof of address.
- Submit. SARS will confirm your PAYE registration number within 3 to 5 business days.
What Is Included in PAYE Calculations?
PAYE is calculated on each employee remuneration package, including all forms of taxable compensation.
- Basic salary or wages
- Commission and performance bonuses
- Travel allowances (80% is included in remuneration for PAYE unless the employee uses a logbook)
- Cell phone and data allowances (taxable if above a reasonable business use threshold)
- Housing allowances
- Company car fringe benefits (taxable benefit calculated using the SARS fringe benefit table)
- Medical aid contributions paid by the employer (above the employee medical tax credit)
- Retirement fund contributions by the employer (above the deductible limit)
Monthly PAYE Employer Submissions (EMP201)
Every month you must submit an EMP201 return to SARS by the 7th of the following month (or the last business day before the 7th). The EMP201 declares the total PAYE, SDL and UIF amounts for all employees for the month.
Payment of the amounts declared on the EMP201 must also be made by the 7th of the month. Late submission and late payment both attract penalties.
| Contribution | Rate | Cap / Notes |
|---|---|---|
| PAYE | Per employee tax table | Deducted from employee gross remuneration |
| UIF (employer contribution) | 1% of remuneration | Capped at R177.12 per month (2025/26 cap) |
| UIF (employee contribution) | 1% of remuneration | Deducted from employee remuneration; same cap |
| SDL (Skills Development Levy) | 1% of total leviable amount | Applicable if total annual payroll exceeds R500,000 |
Bi-Annual and Annual Employer Reconciliations
Employers must submit a reconciliation return (EMP501) twice a year to reconcile the PAYE, UIF and SDL declared on monthly EMP201 returns against the actual amounts paid.
The interim reconciliation covers the period March to August and is due by 31 October each year.
The annual reconciliation covers the full tax year (March to February) and is due by 31 May each year.
As part of the annual reconciliation, employers must generate and submit IRP5/IT3(a) certificates for each employee, reflecting their earnings and deductions for the year. Employees use these certificates to file their personal tax returns.
Employees who do not receive their IRP5 by 31 May should request it from their employer. If the employer fails to provide it, the employee can contact SARS on 0800 00 7277 or visit a branch.
IRP5 Certificates
An IRP5 is an employee tax certificate that shows the employee total income and tax deducted for the year. Every employee who earned any remuneration must receive an IRP5 by the end of May following the tax year end.
The IRP5 is pre-loaded into the employee eFiling account by SARS, which is how SARS can generate auto-assessments for salaried employees.
Incorrect IRP5 certificates must be corrected through eFiling by resubmitting the reconciliation with the correct figures.
Tax Directives for Special Payments
A tax directive is an instruction from SARS telling an employer what tax rate to apply to a specific payment, such as a lump sum from a pension fund, a severance benefit, a bonus or share scheme payment.
Employers must apply for a tax directive on eFiling before processing any payment that requires one. SARS issues the directive electronically and the employer applies the directed rate to the payment.