An employer whose payroll is above R500 000 a year pays 1% of it to SARS every month as the skills development levy. Most of that money is earmarked for training. Here is how the levy is worked out, where it goes, and how to stop paying for training twice.
The skills development levy, usually shortened to SDL, is a monthly charge on an employer’s payroll that funds skills training in South Africa. It was created by the Skills Development Levies Act 9 of 1999 and it is collected by SARS alongside PAYE and UIF. It is not a tax on profit. It does not fall away in a bad year, because it is a percentage of what you pay your people rather than a share of what the business earns.
The money does not stay with SARS. It is passed on to the Sector Education and Training Authority for your industry, abbreviated SETA, and to the National Skills Fund. A portion of it comes back to you as a grant if you tell your SETA what training you are doing. An employer who pays the levy every month and never claims is funding other companies’ training while paying full price for its own.
| Item | Detail |
|---|---|
| Rate | 1% of your monthly payroll |
| Who pays | Employers who expect total remuneration to exceed R500 000 over the next 12 months |
| Collected by | SARS |
| Declared on | The EMP201 monthly employer declaration, together with PAYE and UIF |
| Payment deadline | Within seven days after the end of the month |
| Governing law | Skills Development Levies Act 9 of 1999 |
| Where it goes | 80% to your SETA, 20% to the National Skills Fund |
The levy is 1% of your leviable amount for the month. It has been 1% since 1 April 2001; it started at 0.5% the year before. There is no sliding scale and no cap, so a payroll twice the size pays twice the levy.
The leviable amount is the total remuneration you pay or owe your employees for that month, worked out the same way as it is for PAYE under the Fourth Schedule of the Income Tax Act. That means it is not just basic salary. Overtime, leave pay, bonuses, commission, allowances and fees all form part of it. It applies whether or not you actually had to withhold employees’ tax from a particular person.
The Act excludes a short list of items from the leviable amount. The ones most employers run into are pensions and retirement allowances, allowances paid to a learner under a registered learnership in terms of section 18(3) of the Skills Development Act, and certain deemed remuneration of directors of private companies. If your payroll system is set up correctly it already separates these; if you work the figure out by hand, check them before you declare.
The Act exempts five kinds of employer from the skills development levy. The one that matters to most small businesses is the payroll threshold.
Note the difference in how registration works. An employer exempt because of the R500 000 threshold does not have to register for the levy at all. The other four categories are still required to register with SARS, and then declare the exemption. If you are liable, you must apply to register; the levy is not something SARS bills you for after the fact.
The skills development levy is declared and paid monthly on the EMP201 monthly employer declaration, the same return that carries your PAYE, your UIF and any employment tax incentive you are claiming. Each EMP201 generates its own payment reference number, and the payment has to carry that reference so SARS can match it to the right declaration and the right month.
Payment is due within seven days after the end of the month in which the remuneration was paid. If that day falls on a weekend or a public holiday, pay on the last business day before it. Employers file and pay through eFiling, by electronic transfer, or at a participating bank.
One practical point that catches employers out: the levy and the grant are two separate systems with two separate deadlines. SARS wants the levy every month. Your SETA wants the plan and the report once a year. Being up to date with SARS does not get you the grant, and submitting to your SETA does not excuse a late payment to SARS.
The Act splits every rand of skills development levy collected for a SETA two ways, and it is worth knowing the split because it tells you how much of your own money is realistically reachable.
| Share | Goes to | What it funds |
|---|---|---|
| 80% | Your SETA | The mandatory grant paid back to employers who submit, plus discretionary grants for learnerships, bursaries and skills programmes |
| 20% | The National Skills Fund | National skills priorities set by the Department of Higher Education and Training |
Two details sit behind that table. Where an employer falls outside every SETA, the whole levy goes to the National Skills Fund instead. And where a SETA collects the levy itself rather than SARS, it has to pay the National Skills Fund its 20% over by the fifteenth of each month.
The route back is the mandatory grant. The long-standing published position is that a SETA returns 20% of the levies you paid, on condition that you submitted a Workplace Skills Plan and an Annual Training Report on time and your SDL account with SARS is current. Grant rates and the SETA structure have been under review, so confirm the current figure with your own SETA before you budget for it.
The submission itself is a separate job with its own deadline and its own paperwork, and it is covered in full on the Workplace Skills Plan page: what goes in the plan, who is allowed to compile it, what training counts, and what happens if you miss the date. The short version is that the plan has to be in before the deadline, and the training in your report has to be evidenced with registers and certificates.
Beyond the mandatory grant there are discretionary grants, which SETAs award by application for things like learnerships and bursaries rather than paying out automatically. Those are competitive and the rules differ by SETA. The mandatory grant is the one every levy-paying employer can plan around.
The Skills Development Levies Act attaches a penalty and interest to an unpaid levy, and they run separately from each other.
There is a second cost that does not appear on any SARS statement. An SDL account in arrears puts the mandatory grant at risk, because a current levy account is one of the conditions for the grant being paid out. An employer who falls behind can end up paying the levy, the penalty and the interest, and still buying its training at full price.
The levy is easier to act on once it is a rand figure rather than a percentage. The table below works the levy and a 20% mandatory grant out at five payroll sizes, and the list underneath shows what that grant covers at the fees on this site.
| Annual payroll | Levy per month | Levy for the year | Grant at 20% |
|---|---|---|---|
| R600 000 | R500 | R6 000 | R1 200 |
| R1 200 000 | R1 000 | R12 000 | R2 400 |
| R3 000 000 | R2 500 | R30 000 | R6 000 |
| R6 000 000 | R5 000 | R60 000 | R12 000 |
| R12 000 000 | R10 000 | R120 000 | R24 000 |
Fees for every course are on the prices page, and the ranges differ sharply between safety training, lifting machinery and earth moving machines. Refreshers are the cheapest way to use a grant, because they keep certificates that are already in place from lapsing.
Work out what you reasonably expect to pay in total remuneration over the next 12 months. If that figure will exceed R500 000, you are liable and you have to apply to SARS to register. If it will not, you are exempt and you do not have to register for SDL at all. The test is forward-looking, so a business that is growing can cross the threshold part-way through a year.
On remuneration as the Fourth Schedule of the Income Tax Act defines it, which is closer to gross pay than to taxable pay. Overtime, leave pay, bonuses, commission, allowances and fees are all in. It applies whether or not employees’ tax actually had to be withheld from a given person. A short list of items is excluded, including pensions and retirement allowances.
No, not on an allowance paid to a learner under a registered learnership in terms of section 18(3) of the Skills Development Act. That is one of the items the Skills Development Levies Act specifically excludes from the leviable amount. Ordinary wages paid to a young employee who is not on a registered learnership are not excluded.
Not without dealing with SARS first. The exemption turns on what you reasonably expect to pay over the next 12 months, so if your payroll has genuinely come down and will stay down, the exemption can apply. But you are registered, and a registered employer that simply stops declaring looks like a non-payer rather than an exempt one. Confirm your SDL status with SARS or your accountant and get the registration dealt with properly.
No. The levy goes to SARS and then to your SETA and the National Skills Fund. You cannot set training invoices off against it. You pay the levy, you pay for the training, and then you claim the mandatory grant back from your SETA by submitting the plan and the report. The grant arrives as a payment from the SETA, not as a reduction of what you owe SARS.
Nothing happens to you, which is the problem. There is no penalty for not claiming, and no back-claiming either: a grant is tied to the year its plan and report covered, so a year that went unclaimed stays unclaimed. The levy keeps being collected and spent on the sector. For an employer on a R6 000 000 payroll that is around R12 000 a year walked away from.
No. The levy is a tax obligation; accreditation is a separate quality assurance process that applies to the training provider, not to the employer paying for the training. Being up to date with SDL says nothing about whether a certificate your team holds will stand up to an audit. What matters there is who the provider is accredited with and whether the certificate can be verified. Fundza Training Institute issues certificates learners can download from the portal.
Tell us how many people need certifying and where they are based, and we will come back with dates and a quotation you can put straight into a Workplace Skills Plan.
Group bookings and on-site training · Browse all courses · Other compliance guides
