PAYE stands for Pay-As-You-Earn. It is the system South African employers use to collect income tax from employees each month and pay it directly to SARS — so employees don't receive a large tax bill at year-end.
In plain English
Instead of earning your full salary and settling your tax in February each year, your employer takes a portion of your salary every month and sends it to SARS on your behalf. By the time the tax year ends, most of your liability is already paid.
Every South African employer who pays employees a salary above the tax threshold must register as an employer with SARS and deduct PAYE. The 2025/2026 tax threshold is R95,750 per year (R7,979/month). Employees earning below this are not subject to PAYE, but you still need to register and submit a nil return.
PAYE is based on the employee's taxable income — gross salary minus tax-deductible contributions (retirement fund, medical aid, etc.). SARS publishes annual tax tables with sliding scales:
| Taxable Income (2025/26) | Rate |
|---|---|
| R0 – R237,100 | 18% |
| R237,101 – R370,500 | 26% |
| R370,501 – R512,800 | 31% |
| R512,801 – R673,000 | 36% |
| R673,001 – R857,900 | 39% |
| R857,901 – R1,817,000 | 41% |
| R1,817,001+ | 45% |
Rebates are then subtracted from the calculated tax. The primary rebate for 2025/26 is R17,235, effectively making the first R95,750 of income tax-free.
PAYE is due to SARS by the 7th of the following month via the EMP201 return on SARS eFiling. If the 7th falls on a weekend or public holiday, it moves to the next business day.
They are the same tax, just collected differently. Income tax is the liability; PAYE is the mechanism by which employees pay it throughout the year. At year-end, employees who had the correct PAYE deducted will owe nothing extra — and may receive a refund if too much was deducted.
PAYE stands for Pay-As-You-Earn. It is a method of collecting income tax from employees at source — the employer deducts the correct tax each month and pays it directly to SARS on behalf of the employee.
Both the employer and employee are involved. The employer calculates, deducts and pays PAYE to SARS. The employee's gross salary is reduced by the PAYE amount each month.
PAYE must be paid to SARS by the 7th of the month following the month in which it was deducted, via the monthly EMP201 submission on eFiling.
Yes. Bonuses are included in an employee's taxable income for that month. The employer must calculate the annual effect of the bonus on the PAYE rate and withhold the correct amount.
The employee can claim a refund when filing their personal income tax return (ITR12). Alternatively, you can adjust deductions in subsequent months within the same tax year.
A SARS instruction to an employer to deduct PAYE at a specific rate — usually for lump sums, retirement payouts or where the standard tables would produce the wrong result.
No. Provisional tax is paid by people with non-employment income (business profits, rental income, etc.). PAYE only applies to employment income.
Every payroll run calculates the correct PAYE for each employee using current SARS tax tables — no spreadsheets, no mistakes.
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