The short answer
Provisional tax is how SARS collects income tax in advance from people and companies who earn income that is not fully taxed through PAYE. Most provisional taxpayers make two payments a year: the first by 31 August and the second by the last working day of February. An optional third “top-up” payment by 30 September helps you avoid interest. Pay late and SARS adds a 10% penalty plus interest. Underestimate your income and you can face a further 20% penalty.
If you run a business, earn rental income, freelance, or receive investment income above the exempt thresholds, provisional tax is probably part of your life whether you like it or not. It is also one of the most common sources of unexpected SARS penalties we see. The good news is that it is completely manageable once you understand the rhythm.
This guide explains who has to pay provisional tax, when the payments are due, how the penalties work, and the simple habits that keep you on the right side of SARS.
What is provisional tax?
Provisional tax is not a separate tax. It is a way of paying your normal income tax in instalments during the tax year, instead of in one large lump sum after you file your return. Think of it as PAYE for people whose income does not come from a salary.
You estimate your taxable income for the year, calculate the tax on that estimate, and pay it to SARS in two (sometimes three) instalments using the IRP6 return on eFiling. When you later submit your annual income tax return, SARS compares what you paid in advance with what you actually owe, and you either receive a refund or pay the difference.
Who has to register for provisional tax?
You are generally a provisional taxpayer if you earn income that is not remuneration from an employer, for example:
- Business or trading income, including sole proprietors and freelancers
- Rental income from property
- Interest and foreign dividends above the exempt amounts
- Income from consulting, commission or directors’ fees not subject to PAYE
- Companies and most trusts, which are automatically provisional taxpayers
There are limited exemptions. Individuals who do not carry on a business may be exempt if their taxable income is below the tax threshold, or if their income other than salary (such as interest and rental) is below R30,000 for the year. Because these rules are easy to misread, it is worth confirming your status with a registered tax practitioner rather than assuming.
When are provisional tax payments due?
For individuals and businesses with a February year-end, the calendar looks like this:
| Payment | Due date | What it covers |
|---|---|---|
| First payment | 31 August | Roughly half of your estimated tax for the year, based on your income for the first six months |
| Second payment | Last working day of February | The balance of your estimated tax for the full year |
| Third payment (optional) | 30 September | A voluntary top-up to reduce or avoid interest on any shortfall |
Companies with a different financial year-end pay six months into their financial year, at year-end, and (optionally) six months after year-end, or seven months for companies with a February year-end.
If a due date falls on a weekend or public holiday, the payment must reach SARS by the last working day before it. Remember that bank transfers can take time to clear, so do not leave it until the final afternoon.
What penalties apply to provisional tax?
There are three ways provisional tax can cost you more than it should.
1. Late payment penalty
If you pay late, SARS charges a 10% penalty on the amount outstanding, plus interest at the prescribed rate until it is paid.
2. Underestimation penalty
This one catches many people. On your second payment, your estimate must be reasonably accurate. If it is too low, SARS can levy a penalty of up to 20% of the shortfall:
- Taxable income of R1 million or less: your estimate must be at least 90% of your actual taxable income, or at least equal to the SARS “basic amount” (generally your taxable income from the latest assessment, adjusted in some cases), whichever is lower.
- Taxable income above R1 million: your estimate must be at least 80% of your actual taxable income.
3. Late submission or non-submission
If you do not submit the IRP6 return for the second period, SARS can treat your estimate as nil, which almost guarantees an underestimation penalty on the full amount.
How do you calculate provisional tax?
At a high level, the calculation works like this:
- Estimate your total taxable income for the full tax year (all income, less allowable deductions).
- Calculate the normal tax on that income using the current tax tables.
- Subtract rebates, medical tax credits and any PAYE already deducted.
- For the first payment, pay half of that amount. For the second, pay the full-year amount less your first payment.
The tricky part is the estimate. A good estimate is based on up-to-date management accounts or bookkeeping, not last year’s numbers plus a guess. That is why provisional tax and good bookkeeping go hand in hand.
Five habits that keep provisional tax painless
- Keep your books current. Monthly bookkeeping means your August and February estimates are based on real numbers.
- Put tax money aside every month. A separate savings account for tax turns a stressful lump sum into a non-event.
- Review before the second payment. Your February estimate is the one that carries the underestimation penalty, so give it proper attention in January.
- Use the third payment when needed. If your income was higher than expected, a top-up by 30 September stops interest from running.
- Diarise the dates. Or better yet, have your accountant diarise them for you.
How Stratwell helps
We prepare and submit provisional tax returns for individuals, sole proprietors, companies and trusts, using your actual numbers to get the estimate right. Because we also handle bookkeeping, there are no last-minute scrambles for information. Explore our tax and SARS compliance services or book a consultation.
Frequently asked questions
Do I have to pay provisional tax if I earn a salary?
Not if your only income is a salary taxed through PAYE. If you also earn rental, business or significant investment income, you will usually need to register as a provisional taxpayer.
What happens if I miss the 31 August provisional tax deadline?
SARS charges a 10% late payment penalty on the outstanding amount plus interest. Submit and pay as soon as possible to limit the interest, and speak to your tax practitioner about whether a remission request is appropriate.
Can I pay more provisional tax than I need to?
Yes. Overpaid provisional tax is credited against your final assessment and refunded if you have paid more than you owe. Some taxpayers deliberately pay slightly more to avoid underestimation penalties.
Is the third provisional tax payment compulsory?
No. It is voluntary, but it is a smart way to reduce interest if your second payment turned out to be too low.
This article is general information based on the rules as at October 2026 and is not tax advice. Tax rules change and every situation is different, so please speak to a registered tax practitioner about your circumstances.
