PAYE (Pay-As-You-Earn)

“What is PAYE?”

PAYE stands for Pay-As-You-Earn.

It’s a system where you, as an employer, deduct income tax from your employee’s salary and pay it directly to SARS on their behalf.

It ensures that employees pay income tax each month, instead of once a year in a lump sum.

“Who needs to register for PAYE?”

If your business has employees who earn more than the monthly tax threshold (around R95,750 per year, or R7,979 per month for the 2024/2025 tax year), you must:

  • Register for PAYE with SARS
  • Deduct tax from their salaries every month
  • Submit EMP201 returns and pay the tax over to SARS

Even if you only have one employee, if they earn above the threshold, PAYE applies.

“How does PAYE work?”

Let’s say your employee earns R10,000 per month. You’d…

  1. Calculate how much tax they owe using SARS tax tables
  2. Deduct that tax from their salary
  3. Submit an EMP201 return to SARS each month
  4. Pay the deducted tax over to SARS by the due date

The employee receives their net (after-tax) salary, and you handle the admin.

“What other taxes go with PAYE?”

If you register for PAYE, you’ll likely need to register for:

  • UIF (Unemployment Insurance Fund) - required for most employees
  • SDL (Skills Development Levy) - required if your total payroll is over R500,000 per year

These are also submitted and paid through your monthly EMP201 return.

“What happens if I don’t comply with PAYE rules?”

If you don’t register or pay PAYE:

  • SARS can charge penalties and interest
  • You may face legal action or compliance flags
  • It can damage your business’s reputation and limit your ability to apply for tenders or funding

You can register your company for PAYE with SARS online with Govchain – it’s quick and easy!


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