Demand-ranked tax questions · Employer · Question 14 of 20
How are travel allowances and company cars taxed?
A travel allowance, reimbursive kilometre payment and employer-provided vehicle are taxed differently. For a travel allowance, 80% is generally included for PAYE, reduced to 20% when the employer is satisfied at least 80% of use will be business. For 2026/27, the simplified reimbursive rate is R4.95 per business kilometre when its conditions are met.
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The points that decide the answer
- Home-to-work travel is normally private, not business travel.
- A contemporaneous logbook supports business kilometres and is essential for most year-end claims or reductions.
- Actual-cost and deemed-cost methods have different evidence and calculation requirements.
- A company car creates a fringe benefit, with a possible reduction for substantiated business use.
A practical way to handle it
- Choose the correct remuneration structure before payroll runs.
- Record opening and closing odometer readings.
- Log each business trip with date, destination, reason and distance.
- Reconcile payroll codes and the annual tax calculation.
Common mistakes
- Estimating business kilometres at year-end
- Treating commuting as client travel
- Paying both an allowance and reimbursement without checking the rules
What to keep on file
Vehicle purchase details, logbook, fuel and maintenance costs, payroll and reimbursement schedules.
Source and scope
Based on current SARS guidance, reviewed on 28 August 2026. This is general information, not tax advice. Rates, thresholds and outcomes depend on the tax year and your facts. Regulated submissions and advice are handled through registered partners where required.
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