Statutory topics
PAYE (Pay-As-You-Earn) explained for employers
PAYE is the employees' tax an employer must withhold from remuneration and pay to SARS. The employer, not the employee, carries the legal duty to deduct the correct amount, declare it and pay it over on time.
Who must deduct PAYE
Any person who pays remuneration to an employee must register as an employer with SARS and withhold employees' tax. This includes companies, close corporations, trusts, sole proprietors with staff, non-profit organisations and, in defined circumstances, employers of independent contractors who fall inside the statutory definition of an employee.
What counts as remuneration
- Salary, wages, overtime, leave pay and bonuses
- Commission and incentive payments
- Allowances such as travel and subsistence, to the extent they are taxable
- Fringe benefits, including company cars, low-interest loans and employer-provided accommodation
- Certain lump sums on termination, retrenchment or retirement
How the PAYE calculation works
1. Determine gross remuneration
Add all taxable earnings, taxable allowance portions and the cash value of taxable fringe benefits for the period.
2. Apply allowable deductions
Deductions such as retirement fund contributions reduce taxable income within the limits set by the Income Tax Act.
3. Annualise and apply the tax tables
The period's taxable income is annualised, the individual tax tables for the tax year are applied, and rebates and applicable medical scheme tax credits are subtracted.
4. De-annualise to the pay period
The annual tax is converted back to the pay period to give the PAYE withheld. Our PAYE calculator shows each step for the current tax year.
Declaring and paying PAYE
PAYE is declared monthly on the EMP201 together with UIF and SDL, and paid to SARS by the statutory due date. The amounts are then reconciled twice a year on the EMP501 and reflected on each employee's IRP5 certificate.
Employer risks and penalties
- Penalties and interest on late payment or late declaration
- Personal liability for representative taxpayers in defined circumstances
- Under-deduction remains recoverable from the employer, not only the employee
- Incorrect fringe benefit or allowance treatment surfacing years later in a SARS audit
Frequently asked questions
What is PAYE?
PAYE is Pay-As-You-Earn, the employees' tax an employer must withhold from remuneration each pay period and pay over to SARS on the employee's behalf.
Who is responsible for paying PAYE to SARS?
The employer. Even though the tax is the employee's liability, the law places the duty to deduct, declare and pay on the employer, along with the penalties for getting it wrong.
Is PAYE deducted from allowances and fringe benefits?
Yes, to the extent that they are taxable. Travel allowances, subsistence allowances and fringe benefits each have a prescribed inclusion rate or valuation rule set by the Income Tax Act.
When is PAYE due?
PAYE is declared and paid monthly with the EMP201 by the statutory due date after month end. Where that date falls on a weekend or public holiday, the payment must reach SARS earlier.
Patuza calculates, declares and reconciles PAYE for South African employers as part of a managed payroll service.
Book a consultationRelated services
- Payroll compliance →
PAYE, UIF, SDL, EMP201, EMP501 and IRP5 compliance managed end to end for SARS.
- Payroll processing →
Monthly and weekly payroll processing, calculations, payslips and statutory deductions.
- EMP201 & EMP501 reconciliation →
Monthly EMP201 declarations reconciled to bi-annual EMP501 submissions and IRP5 certificates.
Related topics
- UIF →
Unemployment Insurance Fund contributions, declarations and employer obligations.
- SDL →
Skills Development Levy: who pays, how it is calculated and how it is recovered.
- EMP201 →
The monthly employer declaration for PAYE, UIF and SDL, and how to get it right.
- Statutory deductions →
The full deduction hierarchy: what employers may deduct, in what order and within what limits.
- Net pay →
How take-home pay is derived from gross remuneration, deductions and tax.
Related insights
- PAYE calculator →
Step-by-step SARS PAYE calculation for the current tax year.
- How PAYE is calculated →
The annualisation method SARS expects, step by step, with the traps that distort it.
Last reviewed 2026-03-01. Rates, thresholds and limits are set by legislation and change — most commonly in the annual Budget. This page explains how the obligation works; always confirm current values against the official SARS or Department of Employment and Labour publication for the applicable tax year.