PAYE, UIF and SDL for South African employers
A short overview of the three employer payroll obligations and the monthly EMP201 declaration. 4invoices does not do payroll.
South African employers withhold and pay three items on their employees' pay. PAYE is income tax withheld from remuneration, following the SARS tax tables. UIF is the Unemployment Insurance Fund contribution of 1% paid by the employee and 1% paid by the employer, up to a monthly earnings limit. SDL is the Skills Development Levy of 1% of payroll for employers whose annual payroll exceeds R500,000. Employers declare and pay these to SARS each month on the EMP201, generally by the 7th of the following month, and reconcile them with the EMP501 process. 4invoices does not calculate payroll, does not file the EMP201 or EMP501 and has no payroll integrations. It is for creating invoices. Use payroll software or your accountant for these obligations.
- PAYE: income tax withheld from employees, per SARS tax tables.
- UIF: 1% employee plus 1% employer, up to a monthly earnings limit.
- SDL: 1% of payroll where annual payroll exceeds R500,000.
- EMP201 is the monthly employer declaration; reconciliation follows through EMP501.
How it works
Register as an employer. Employers register with SARS for PAYE, and with the Department of Employment and Labour for UIF.
Calculate each pay run. Use the SARS tax tables for PAYE and the current UIF and SDL rules. This needs payroll software or an accountant.
Pay over what you withheld. Declare PAYE, UIF and SDL on the EMP201 and pay SARS by the due date, generally the 7th of the following month.
Reconcile. Reconcile your monthly declarations against the tax certificates you issue through the EMP501 process, which happens twice a year.
Keep records. Keep payroll records for at least five years.
Legal references
- Income Tax Act 58 of 1962, Fourth Schedule - employees' tax (PAYE).
- Unemployment Insurance Contributions Act 4 of 2002 - UIF contributions.
- Skills Development Levies Act 9 of 1999 - SDL.
Frequently asked questions
What is the difference between PAYE and the EMP201?
PAYE is the tax withheld from each employee. The EMP201 is the monthly declaration on which the employer reports and pays PAYE, UIF and SDL to SARS.
Who pays SDL?
Employers whose annual payroll exceeds R500,000 pay SDL at 1% of payroll. Check the current threshold with SARS.
What is the UIF limit?
UIF is calculated on earnings up to a monthly limit that is updated from time to time. Check the current figure on the Department of Employment and Labour or SARS website.
Does 4invoices do payroll or file the EMP201?
No. 4invoices does not do payroll, does not file the EMP201 or EMP501 and has no payroll integrations. It creates invoices with the tax rate on each line and a PDF download.