The short answer
South African employers must deduct PAYE from employees’ pay, contribute to UIF (1% from the employee plus 1% from the employer), and pay the Skills Development Levy (1% of payroll) if annual payroll exceeds R500,000. All three are declared and paid to SARS monthly on the EMP201 by the 7th of the following month. Twice a year, employers reconcile everything on the EMP501 and issue IRP5 certificates: the annual reconciliation is due by 31 May and the interim by 31 October.
Hiring your first employee is a milestone. It is also the moment your business takes on a monthly compliance obligation that SARS takes very seriously. Payroll taxes are money you hold in trust for SARS and your employees, so late or incorrect payments attract penalties quickly.
This guide covers the three payroll taxes, the monthly and twice-yearly deadlines, and the mistakes we see most often when businesses come to us for help.
What are PAYE, UIF and SDL?
| Tax | Who pays | How much |
|---|---|---|
| PAYE (Pay-As-You-Earn) | Employee, withheld by the employer | Calculated using the SARS tax tables, based on the employee’s remuneration |
| UIF (Unemployment Insurance Fund) | Employee and employer | 1% from the employee plus 1% from the employer, on remuneration up to the UIF earnings ceiling |
| SDL (Skills Development Levy) | Employer | 1% of total payroll, only if the employer’s annual payroll exceeds R500,000 |
Most employers must register for PAYE and UIF as soon as they employ someone who earns above the tax threshold, or as soon as they have any employees working more than 24 hours a month in the case of UIF. You register for these with SARS on eFiling. UIF also requires registration with the Department of Employment and Labour for the employee declarations.
What is the EMP201 and when is it due?
The EMP201 is the monthly employer declaration. It shows the PAYE, UIF and SDL due for the month, and it must be submitted and paid by the 7th of the following month. If the 7th falls on a weekend or public holiday, the deadline moves to the last business day before it.
Two things trip people up here:
- Submitting without paying (or paying without submitting). SARS needs both the declaration and a payment that uses the correct payment reference number.
- Submitting nil returns late. If you are registered but had no payroll in a month, you still need to submit an EMP201.
What is the EMP501 reconciliation?
Twice a year, employers reconcile the totals declared on their EMP201s with the payments made and with the tax certificates issued to employees:
| Reconciliation | Period covered | Due date |
|---|---|---|
| Interim EMP501 | 1 March to 31 August | 31 October |
| Annual EMP501 and IRP5/IT3(a) certificates | 1 March to end February | 31 May |
The annual reconciliation is especially important because the IRP5 certificates feed directly into your employees’ personal tax returns and SARS auto-assessments. Errors on your side become problems for your staff.
What are the penalties for getting payroll wrong?
- Late PAYE payment: a 10% penalty on the amount outstanding, plus interest.
- Late or incorrect EMP501: administrative penalties of 1% of the year’s total PAYE liability for each month the reconciliation is late, up to a maximum of 10%.
- Not deducting PAYE: the employer becomes personally liable for the tax that should have been withheld.
Directors and public officers can also be held personally liable for unpaid employees’ tax in certain circumstances, so this is not something to delegate and forget.
Common payroll mistakes we fix for clients
- Paying directors or family members “off payroll”. Salaries paid to directors are remuneration and subject to PAYE.
- Ignoring fringe benefits. Company cars, cellphone allowances, low-interest loans and medical aid contributions often carry tax consequences.
- Wrong employee tax numbers or ID numbers. These cause IRP5 rejections and auto-assessment errors for employees.
- Forgetting SDL once payroll grows. Many businesses pass the R500,000 threshold without noticing and need to start paying SDL.
- Not registering UIF employees with the Department of Employment and Labour. This creates problems when employees later need to claim.
How Stratwell helps
We run payroll for businesses of all sizes: payslips, EMP201 submissions, EMP501 reconciliations, IRP5 certificates, UIF declarations and leave records, all in one place and all on time. See our bookkeeping and payroll service or get in touch.
If you are also self-employed or earn income outside a salary, read our guide to provisional tax deadlines and penalties.
Frequently asked questions
Do I need to register for PAYE if I only have one employee?
You must register for PAYE if any employee earns above the annual tax threshold, and for UIF if any employee works more than 24 hours a month. Many small businesses therefore need to register as soon as they hire their first person.
Is SDL compulsory for small businesses?
No. You only need to register for and pay SDL once your total annual payroll is expected to exceed R500,000.
When is the EMP201 due if the 7th is a Sunday?
It moves to the last business day before the 7th, usually the preceding Friday.
Can I correct a mistake on an EMP201?
Yes. You can submit a revised EMP201 on eFiling for the relevant period. It is best to correct errors before the EMP501 reconciliation so the totals agree.
This article is general information based on SARS requirements as at October 2026 and is not tax advice. Rates, thresholds and ceilings are updated from time to time, so please check the current figures or speak to a registered tax practitioner.
