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SARS Skills Development Levy (SDL) in South Africa (2026) — Rates, Exemptions & SETA Grants

Reviewed & Verified
Written by the Independent Editorial Team · Reviewed & Verified by Solly Maanaso, CA(SA)
If your annual payroll exceeds R500,000, you are legally required to pay SDL — 1% of total monthly remuneration — to SARS each month. But here is what most employers miss: you can claim back 20% of what you pay as a mandatory SETA grant, provided you submit a WSP and ATR by 30 April each year. This guide covers what you owe, who is exempt, and how to claim every rand back.
YOU PAY
1% of monthly payroll to SARS via EMP201 by 7th.
Example: R60,000 payroll → R600 SDL/month.
YOU CAN CLAIM BACK
20% of annual SDL as mandatory SETA grant if WSP + ATR submitted by 30 April.
Example: R7,200 SDL/year → R1,440 grant.
JUMP TO: What is SDL? Who Must Pay? How to Calculate How to Pay The Mandatory Grant How to Claim Timeline FAQ

What is SDL?

Definition: SDL is a mandatory monthly levy paid by employers to SARS to fund skills development and training in South Africa. It is 1% of total monthly payroll, borne entirely by the employer — it cannot be deducted from employee salaries.

Legislation: Skills Development Levies Act 9 of 1999. Source: SARS — sars.gov.za/types-of-tax/skills-development-levy/

The purpose of SDL is to improve the skills of the South African workforce. The funds collected are distributed as follows:

  • 80% of collections go to the Sector Education and Training Authorities (SETAs) to fund industry training grants, learnerships, and internships.
  • 20% of collections go to the National Skills Fund (NSF) for national skills priorities.

Source: Skills Development Levies Act.

There are two key points every employer must understand:

  1. SDL is an employer cost only — you cannot recover it from employee salaries.
  2. SDL is recoverable — up to 20% can be claimed back via a mandatory SETA grant if you are compliant.

Source: SARS; Le Consult Group (citing SARS).

Important Rule: SDL cannot be deducted from employees' salaries. It is an operational cost for the business.

Who Must Pay SDL?

Annual Payroll Threshold Obligation
Below R500,000 SDL exempt — no registration required
R500,000 or above Must register + pay 1% monthly

Expected to exceed R500,000 over the next 12 months = must register. (Equivalent to ≈R41,667/month).
Source: SARS — sars.gov.za/types-of-tax/skills-development-levy/

Must Pay

  • Employers with a total leviable payroll above R500,000 over 12 months.
  • Employers liable for PAYE are generally also SDL-liable if they cross the threshold.

Exempt

  • Employers whose total payroll is ≤ R500,000 (and expected to remain so over the next 12 months).
  • National or provincial public service employers.
  • Public entities where ≥80% of expenditure comes from Parliament-voted funds.
  • Registered Public Benefit Organisations (PBOs) where ≥80% of activities are public benefit activities.

Source: SARS.

Growth Warning: If your payroll is approaching R500,000, plan for SDL registration before you cross the threshold — the obligation is proactive.

How to Calculate SDL

SDL = 1% × Total leviable amount for the month

The leviable amount includes:

  • Salaries and wages
  • Overtime payments
  • Leave pay
  • Bonuses
  • Fees and commissions
  • Lump sum payments

Source: SARS — sars.gov.za ("1% of the total amount paid in salaries to employees (including wages, overtime payments, leave pay, bonuses, fees, commissions and lump sum payments)").

Note: Certain payments are excluded from the leviable amount, such as specific pension contributions and retirement allowances. Consult SARS SDL-GEN-01-G01 for the full exclusion list.
Strict Warning: SDL cannot be deducted from employee salaries — it is an employer cost only.

Worked Examples

Total Leviable Amount (Monthly) SDL Payable (1%)
R30,000 R300 (If annual expected > R500k)
R60,000 R600
R150,000 R1,500
R500,000 R5,000

Practical note: The R500,000 threshold is annual, but the calculation and payment are monthly. Track a rolling 12-month total if your payroll fluctuates.

SDL Calculator →

How to Pay SDL — EMP201

SDL is paid monthly to SARS via the EMP201 return on SARS eFiling, together with your PAYE and UIF contributions.

Key Facts

  • One Form: It uses the same EMP201 form as PAYE and UIF — there is no separate return for SDL.
  • Deadline: The 7th of each month. If the 7th falls on a weekend or public holiday, the deadline moves to the last business day before.
  • Declaration + Payment: Both the declaration AND the payment must reach SARS by the deadline.

Source: SARS Budget 2026 FAQ; SARS EMP201 guide.

Once paid, SARS distributes the SDL to the employer's registered SETA via the Department of Higher Education and Training (DHET). (Source: SARS; SASSETA)

For Exempt Employers: If you are exempt because your payroll is below R500,000, the SDL field on eFiling will usually be greyed out. If your payroll grows above the threshold, you must notify SARS to activate it. (Source: SASSETA)

Penalties: Late payment results in interest and penalties. Non-registration when liable can result in a significant back-payment liability.

The SETA Mandatory Grant

Every Rand of SDL you pay can generate a return — if you claim it.
Annual SDL Paid Mandatory Grant Claimable (20%)
R6,000 / year R1,200
R12,000 R2,400
R30,000 R6,000
R60,000 R12,000
R100,000 R20,000

Example: A monthly payroll of R100,000 = R1,000 SDL/month × 12 months = R12,000 annual SDL. 20% of R12,000 = R2,400 mandatory grant.
Source: HWSETA; MICT SETA; ClearComply (March 2026).

What happens to the other 80%?

  • ~20% goes to the National Skills Fund (NSF).
  • The remainder funds SETA operations and discretionary grants.
  • Unclaimed mandatory grants are moved to the discretionary pool by 15 August each year.

Source: HWSETA; ClearComply.

Discretionary Grants: These are separate from the mandatory grant. They are competitive, project-based grants focusing on scarce and critical skills, and must be applied for separately. (Source: SDC Consult)
Proposed Reform Note: One 2026 source has reported the mandatory grant may increase. This is not confirmed by SARS or any official SETA source as of April 2026. Use 20% and check your SETA's documentation for any updates.

How to Claim the Mandatory Grant

Prerequisite: You must be registered with SARS for SDL AND registered with the correct SETA for your sector.

  • 1

    Find and register with your SETA

    You must affiliate with the SETA representing your core business activity. Registration takes 3–6 months, so start early. (Source: SASSETA)

    Sector SETA Name
    IT & CommunicationsMICT SETA
    Safety & SecuritySASSETA
    ConstructionCETA
    Health & WelfareHWSETA
    ServicesServices SETA
    Finance & AccountingFASSET
    ManufacturingMERSETA
  • 2

    Appoint a Skills Development Facilitator (SDF)

    An approved SDF is required by most SETAs before they will accept your WSP/ATR submissions. (Source: HWSETA)

  • 3

    Submit WSP by 30 April Deadline: 30 April

    The Workplace Skills Plan (WSP) is your annual training plan. It outlines the employee profile, planned training, and sector skills priorities. It is submitted via your SETA's online portal.

  • 4

    Submit ATR by 30 April Deadline: 30 April

    The Annual Training Report (ATR) is submitted together with the WSP. It reports on the training completed in the prior year, employees trained, and the costs involved.

  • 5

    Receive your mandatory grant

    If compliant, the SETA pays 20% of your annual SDL paid directly back to you, usually on a quarterly basis. (Source: HWSETA; MICT SETA; ClearComply)

Missed Deadline: Miss 30 April → forfeit your 20% mandatory grant for that year. The unclaimed amount rolls to the discretionary pool by 15 August. There is no retrospective or late submission option. (Source: ClearComply; HWSETA)

SDL Compliance Timeline

When Action Consequence of Missing
7th of each month Submit EMP201 + pay SDL (with PAYE & UIF) Interest + penalties; criminal liability
30 April each year Submit WSP + ATR to SETA Forfeit 20% mandatory grant
15 August each year Unclaimed grants roll to discretionary pool No further recourse
On employee changes Update SETA data Affects WSP accuracy
On crossing R500k Register for SDL with SARS Retroactive back-pay liability

Sources: SARS; HWSETA; ClearComply.

SARS tax deadlines calendar →

Frequently Asked Questions

The Skills Development Levy (SDL) rate is 1% of the total leviable amount (gross remuneration). It is an employer-only contribution.
Employers with an annual payroll of R500,000 or more must pay SDL. Exemptions exist for public service employers, public entities with ≥80% government funding, PBOs with ≥80% public benefit activities, and small employers with a payroll under R500,000.
NO. SDL is strictly an employer-only cost and cannot be deducted from an employee's salary or wages.
SDL is paid monthly via the EMP201 return on SARS eFiling, together with PAYE and UIF. The deadline is the 7th of each month.
Yes. Employers can claim back 20% of their annual SDL contributions as a mandatory grant by submitting a Workplace Skills Plan (WSP) and Annual Training Report (ATR) to their relevant SETA by 30 April each year.
A Sector Education and Training Authority (SETA) is an industry body responsible for distributing SDL grants and managing skills development within specific sectors. Employers must register with the correct SETA, a process that can take 3–6 months.
A Workplace Skills Plan (WSP) is an annual training plan detailing planned skills development for the upcoming year. It must be submitted by 30 April to claim the mandatory SETA grant.
If you miss the 30 April deadline, you forfeit the 20% mandatory grant for that year. The unclaimed amount rolls over to the SETA's discretionary pool by 15 August, and there is no option for retrospective or late submission.

Related guides

Employer taxes

Business tax guides

Calculators & systems

Sources and references

All skills development levy information on this page is sourced from, or verified against, the following official and authoritative references:

  1. Skills Development Levies Act 9 of 1999 — Primary legislation governing SDL
  2. SARS — Skills Development Levy (SDL) — Official SARS SDL Guide
  3. SARS Budget 2026 FAQ — Updates on tax thresholds and rates.
  4. SETA Guidelines — Including HWSETA, MICT SETA, and SASSETA requirements for WSP/ATR submissions.

This page was last reviewed in April 2026 by Author Name, CA(SA). Next review: after Budget Speech February 2027 (verify SDL rate and threshold); before 30 April 2027 (verify WSP/ATR deadline with SETAs).

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