The Skills Development Levy (SDL) is a payroll tax of 1% of your total payroll, paid to SARS every month on your EMP201. You only have to register and pay it if your total payroll is more than R500,000 over the next 12 months. At or below that amount, you're exempt. Employers who pay SDL can claim part of it back as a grant by submitting a workplace skills plan to their SETA by 30 April each year.
What SDL is for
SDL funds skills training in South Africa. SARS collects the levy and passes it on: most of it goes to the Sector Education and Training Authority (SETA) for your industry, and the rest to the National Skills Fund. SETAs use the money to fund learnerships, bursaries and training, and to pay grants back to employers who train their staff.
Who has to pay SDL
You must register for and pay SDL if you're an employer and your total payroll (the "leviable amount") is more than R500,000 over the next 12 months.
That's roughly R41,700 a month in total salaries and wages across all your employees. Directors' remuneration counts towards payroll.
You don't have to pay SDL if:
your total annual payroll is R500,000 or less over the next 12 months,
you're a national or provincial government department, or
you're a public benefit organisation or other body that SARS has specifically exempted.
If your payroll grows past R500,000 during the year, register for SDL from that point.
How much SDL you pay
SDL is 1% of your monthly leviable amount, which is broadly your total remuneration for the month: salaries, wages, bonuses, overtime, commission and most taxable benefits.
Example: your monthly payroll is R60,000.
SDL = 1% × R60,000 = R600 for the month
Over the year, that's about R7,200.
Unlike UIF, there's no cap on the earnings SDL is calculated on, and it's paid only by the employer. You may not deduct SDL from an employee's salary.
How to register and pay
Register as an employer with SARS on eFiling (form EMP101e or the eFiling registration). You register for PAYE, SDL and UIF in one process. Employers must register within 21 business days of becoming an employer.
Declare SDL each month on your EMP201, together with PAYE and UIF.
Pay by the 7th of the following month. If the 7th falls on a weekend or public holiday, pay on the business day before.
Reconcile twice a year on the EMP501: the interim reconciliation (March to August) is due by 31 October, and the annual one (March to February) by 31 May.
Not registered yet? Smartbook can handle your PAYE registration, which includes SDL and UIF.
How to claim some of your SDL back
SDL isn't only a cost. If you're registered with your SETA and up to date with your levy payments, you can claim back part of it:
Mandatory grant: 20% of the levy you paid. To get it, submit a Workplace Skills Plan (WSP) and Annual Training Report (ATR) to your SETA by 30 April each year.
Discretionary grants. SETAs also fund specific training projects, learnerships and bursaries. These are competitive and depend on your SETA's priorities.
Many small employers never claim, so the money simply stays with the SETA. Our guide explains how to claim SDL back with a workplace skills plan.
Common SDL mistakes
Registering when you don't need to. If your payroll is well under R500,000, you don't have to pay SDL. Check your registration if you've been paying it unnecessarily.
Forgetting to start when you cross R500,000. A growing business can cross the threshold without noticing. SARS can raise penalties and interest on unpaid levies.
Deducting it from staff. SDL is an employer cost only.
Not claiming the mandatory grant. That's 20% of your levy left on the table every year.
Late EMP201s. Late payment attracts a penalty of 10% plus interest. Our SARS admin penalty calculator shows what late returns can cost.
Frequently asked questions
What is the SDL threshold in South Africa? You only have to pay SDL if your total leviable payroll is more than R500,000 over the next 12 months. At or below that amount, you're exempt.
What is the SDL rate? 1% of your total monthly payroll (the leviable amount). There's no earnings cap.
Is SDL deducted from employees' salaries? No. SDL is paid by the employer only. UIF is the levy that is split between employer and employee.
When is SDL paid? Monthly, with PAYE and UIF on the EMP201, by the 7th of the following month.
Can I get my SDL back? Partly. If you're registered with your SETA and submit a Workplace Skills Plan and Annual Training Report by 30 April, you can claim a mandatory grant of 20% of the levy you paid. Discretionary grants are also available for specific training.