Must my business pay Skills Development Levy?

Direct answer

An employer generally registers for Skills Development Levy when the total remuneration expected to be paid over the next 12 months exceeds R500,000. SDL is normally 1% of the remuneration base and is declared with PAYE and UIF on the monthly EMP201.

An employer whose expected payroll does not exceed R500,000 is generally not required to register for SDL. Certain public bodies, qualifying public benefit organisations, municipalities and other listed employers are also exempt.

What this means in practice

The test is forward-looking. Reassess it when hiring, increasing salaries or opening another payroll. Do not apply the R500,000 threshold separately to each branch if the same employer operates them.

The SDL remuneration base follows employee-tax rules and is not always identical to gross payroll or accounting staff costs.

Step-by-step

1. Forecast remuneration for the next 12 months.
2. Check whether a statutory employer exemption applies.
3. Register the employer for SDL when required.
4. Configure the correct remuneration base in payroll.
5. Declare SDL on each EMP201 and pay by the employer deadline.
6. Reconcile SDL in the EMP501 process.

Documents and records to keep

• Payroll forecast and threshold calculation.
• Registration notice and exemption evidence.
• Payroll reports, EMP201s and payment proof.
• EMP501 reconciliations.
• Correspondence with SARS.

Important limits and exceptions

Crossing the threshold can require registration even if earlier months were below it. Being exempt from income tax does not automatically mean being exempt from SDL.

When to get tailored advice

Get help when payroll grows rapidly, several entities share employees, or an exemption depends on public-benefit status.

Related TaxProof guides

• How should an employer update details or stop trading?
• How does an employer claim an ETI refund?

Sources

• SARS, Skills Development Levy