You must register as an employer with SARS within 21 business days of becoming an employer — that is, from the day you first pay anyone remuneration on which tax is deductible. Registering as an employer for PAYE normally means registering for UIF and, where your annual payroll exceeds R500,000, the Skills Development Levy at the same time.
The point most owners miss: paying yourself a salary from your own company makes you an employer. A one-person Pty Ltd where the director draws a monthly salary has exactly the same PAYE obligations as a business with thirty staff.
TL;DR
Trigger: the first payment of remuneration on which employees' tax is deductible.
Deadline: 21 business days from becoming an employer.
Directors count. Paying yourself a salary makes you an employer.
PAYE, UIF and SDL are usually dealt with in one registration.
SDL only applies where annual payroll exceeds R500,000.
The tax threshold for 2026/27 is R99,000 a year — about R8,250 a month.
First EMP201 is due by the 7th of the following month.
What actually triggers the obligation
You become an employer for SARS purposes when you pay remuneration to an employee and that remuneration is subject to employees' tax.
Remuneration is wider than "salary". It includes wages, salaries, bonuses, commission, overtime, leave pay, fees, allowances and most taxable fringe benefits. It also includes directors' remuneration.
The registration obligation applies unless none of your employees are liable for normal tax. In practice you should register the moment you begin paying anyone, because the exception is narrow, it changes the moment someone gets a raise or a bonus, and being registered with nil or zero-tax employees is far cheaper than being caught unregistered.
The tax threshold, and why it does not let you off
For the 2026/27 tax year the annual tax threshold for a person under 65 is R99,000, which is roughly R8,250 a month. Below that, no PAYE is payable.
| Age | Annual tax threshold 2026/27 |
|---|---|
| Under 65 | R99,000 |
| 65 – 74 | R153,250 |
| 75 and over | R171,300 |
Two things follow that people get wrong:
A nil-PAYE employee still creates obligations. UIF is payable from the first rand regardless of the tax threshold, and the employee must still appear on your EMP501 reconciliation with an IRP5 or IT3(a).
One bonus can change everything. An employee on R8,000 a month is below the threshold — until a R15,000 December bonus pushes annual remuneration over R99,000 and creates a PAYE liability you were not registered to deduct.
Yes, this applies to you as a director
This is the single most common gap we see in one and two-person companies.
If your company pays you a salary, your company is an employer. It must:
Register for PAYE
Deduct PAYE and UIF from your salary
Submit an EMP201 every month
Issue you an IRP5 through the EMP501 reconciliation
Drawings are not a salary. Transferring money from the company account to your personal account without running it through payroll does not make it a salary — it typically creates a loan account balance, which brings its own consequences under the deemed dividend rules. It does not avoid PAYE; it just creates a different problem.
There is a further wrinkle for directors of private companies: deemed remuneration rules exist specifically to stop directors taking irregular or deferred payments to defer PAYE. If your drawings are irregular, get the structure reviewed.
The narrow exception: non-executive directors are treated differently. SARS has issued Binding General Rulings 40 and 41 dealing with the VAT and PAYE treatment of non-executive directors, whose fees are generally not subject to PAYE but may attract VAT registration obligations for the individual. If you pay NED fees, read those rulings.
The three registrations that usually happen together
| Registration | Who must register | Rate | Notes |
|---|---|---|---|
| PAYE | Any employer paying remuneration on which tax is deductible | Per the tax tables | The core registration |
| UIF | Employers with employees, subject to limited exclusions | 1% employee + 1% employer | Capped at R17,712 monthly remuneration — max R177.12 each side |
| SDL | Employers whose total annual remuneration exceeds R500,000 | 1% of total gross remuneration | Below R500,000 you are exempt |
SDL is worth checking annually. The R500,000 exemption is on total annual payroll, which is roughly R41,667 a month across all staff. A business with three employees on R15,000 each crosses it. The test is prospective — you register when your payroll is likely to exceed the threshold over the next 12 months.
UIF has a second registration. Registering for UIF with SARS handles the contributions. There is a separate registration with the Department of Employment and Labour for the fund itself, and monthly UI-19 declarations of employee details. Doing one and not the other is common and causes problems when an employee eventually claims.
What happens after you register
You get a PAYE reference number beginning with 7, and typically UIF and SDL numbers linked to it.
Your first EMP201 is due by the 7th of the month following the month in which you paid remuneration. Where the 7th falls on a weekend or public holiday, the deadline moves back to the last business day before it.
You must issue payslips. The Basic Conditions of Employment Act requires written particulars of remuneration for every employee, every pay period.
You are in the EMP501 cycle. Interim reconciliation covering March to August, and an annual reconciliation after February year-end.
You must register your employees for income tax. From the 202602 reconciliation period, a valid Income Tax Reference Number is mandatory on IRP5 and IT3(a) certificates for every employee required to register under section 67 of the Income Tax Act. eFiling and e@syFile will reject the submission outright if any such employee lacks one — no warning and no grace period. Register employees through ITREG or BundleReg on eFiling or e@syFile as you hire them, not in May when the reconciliation is due.
How to register, step by step
1. Get your company's tax affairs in order first. You need an active income tax registration and a verified SARS registered representative before an employer registration will process. If your registered representative is not confirmed with SARS, nothing else will move — this is the single most common blocker.
2. Register on eFiling. Employer registration is done through the Registration, Amendments and Verification (RAV01) process on eFiling, under Maintain SARS Registered Details. You add PAYE, UIF and SDL as tax types against the entity.
3. Have the supporting documents ready:
Company registration documents (CoR14.3)
Certified ID of the registered representative
Proof of business address, generally not older than three months
Business bank account confirmation letter
Proof of the registered representative's residential address
4. Select the correct liability date. This is the date you became an employer, not the date you are applying. Getting this wrong creates either a gap in your filing history or an obligation to file returns for months in which you had no employees.
5. Register separately with the Department of Employment and Labour for UIF. The SARS registration handles the contributions; the Department registration handles the fund. You then submit monthly UI-19 declarations of employee details, which is what allows an employee to claim if they lose their job. Businesses that do only the SARS side discover the gap when a former employee cannot claim and comes back to them.
6. Register your employees for income tax. Use ITREG or BundleReg on eFiling or e@syFile as you onboard each person.
7. Set up payroll before the first pay run, not after. Retro-fitting three months of payslips is considerably more work than doing it right from month one.
How long it takes
Employer registration is usually faster than VAT registration — often days rather than weeks — provided the registered representative is confirmed and the documents are complete. The Department of Labour UIF registration typically runs in parallel.
The other registrations that often come with employing people
Employing your first person triggers more than PAYE. Worth checking all of these at the same time:
| Registration | When it applies | Why it matters |
|---|---|---|
| COIDA (Compensation Fund) | Any employer with one or more employees | Funds injury-on-duty cover. Without it you carry that liability personally, and you cannot obtain a letter of good standing. |
| Letter of good standing | Required by many clients, landlords and construction sites | Issued off a current COIDA registration and up-to-date return of earnings |
| SETA / Workplace Skills Plan | Where you pay SDL | Allows you to claim back up to 20% of SDL as a mandatory grant |
| Bargaining council | Certain sectors — motor, metal, hospitality, security, road freight and others | Sector-specific wage rates and levies that override the national minimum wage |
The bargaining council point catches people. If your industry has a bargaining council agreement, its wage rates, leave provisions and levies apply to you whether or not you are a member — and they typically sit above the statutory minimums.
What late registration costs
Registering late does not mean starting from the date you registered. SARS treats you as having been an employer from the date the obligation arose.
The PAYE you should have deducted becomes your liability. You cannot go back to a departed employee for tax you failed to withhold from their salary eighteen months ago, so in practice the employer funds it.
Penalties and interest apply. Interest on late or underpaid tax runs at 10.25% per annum from 2 March 2026, and administrative non-compliance penalties can be imposed for each outstanding return.
Your tax compliance status goes non-compliant, blocking tax clearance certificates, tender applications and CSD standing.
UIF arrears are payable too, with their own penalty regime.
A worked example of the exposure
A company paid one employee R25,000 a month for 14 months without registering.
Monthly PAYE at R25,000 (under 65, no dependants): approximately R3,171
14 months of PAYE: approximately R44,394
UIF at 2% (both sides) on R25,000, capped at R17,712: R354.24 a month, so about R4,959
Plus interest at 10.25% and administrative penalties on 14 outstanding EMP201s
Comfortably over R50,000 before penalties, on a single employee. The registration itself would have taken a morning.
If you are already late
Do not wait to be found. The position gets worse every month, and voluntary regularisation is treated very differently from discovery.
1. Register immediately. Backdate the registration to the correct date rather than the current one. Registering from today while the liability sits in the past is a worse position, not a better one.
2. Calculate the arrears properly — PAYE, UIF and SDL for every affected month, per employee.
3. Consider the Voluntary Disclosure Programme. Applied for before SARS opens an audit, inquiry or investigation, the VDP gives 100% relief from understatement penalties where there was no intention to evade. Interest remains payable. Once an audit notice is issued for the period, the VDP is gone.
4. Submit the outstanding EMP201s and arrange payment if you cannot settle in full. SARS offers instalment agreements, and they are considerably easier to obtain before enforcement starts than after.
Common misunderstandings
"They are casual workers, so PAYE does not apply." The label does not decide it. Casual and temporary workers earning above the threshold attract PAYE, and specific rules apply to employees engaged for short periods.
"They are independent contractors." Sometimes true, frequently not. SARS applies statutory and common-law tests, and if the arrangement fails them you owe the PAYE you should have deducted, plus penalties and interest. See independent contractor or employee — how SARS decides.
"We pay in cash, so there is no record." There is. Bank withdrawals, employee bank deposits, UIF claims by former staff and Department of Labour inspections all leave trails. Cash payment changes nothing about the legal obligation.
"Nobody earns above the threshold, so we do not need to register." Only while that stays true, and only for PAYE. UIF obligations start from the first rand.
"I am the only employee and it is my own company." Makes no difference. A company paying its director a salary is an employer.
Frequently asked questions
When must I register for PAYE in South Africa? Within 21 business days of becoming an employer — that is, from the day you first pay remuneration on which employees' tax is deductible. The obligation does not apply where none of your employees are liable for normal tax, but that exception is narrow and can be lost by a single bonus.
Do I need to register for PAYE if I am the only employee of my own company? Yes. If your company pays you a salary, it is an employer and must register for PAYE, deduct PAYE and UIF, submit monthly EMP201 returns and issue you an IRP5.
What is the salary threshold before PAYE is deducted? For 2026/27 the annual tax threshold is R99,000 for a person under 65, roughly R8,250 a month. It is R153,250 for ages 65 to 74 and R171,300 for 75 and over. UIF is payable regardless of the threshold.
Do I have to register for UIF and SDL as well? UIF applies to employers with employees, subject to limited exclusions, at 1% from the employee and 1% from the employer, capped at R17,712 of monthly remuneration. SDL only applies where your total annual remuneration exceeds R500,000, at 1% of total gross remuneration.
What happens if I registered for PAYE late? SARS treats you as having been an employer from the date the obligation arose, so the PAYE you should have deducted becomes payable, along with interest at 10.25% per annum and administrative penalties on outstanding returns. The Voluntary Disclosure Programme can remove understatement penalties if you apply before SARS opens an audit or inquiry.
Are drawings from my company the same as a salary? No. Drawings taken without running payroll do not constitute a salary. They typically create a loan account balance, which can trigger deemed dividend consequences under section 64E. They do not avoid PAYE.
Do I need to register employees for income tax? Yes. From the 202602 reconciliation period, a valid income tax reference number is mandatory on IRP5 and IT3(a) certificates for every employee required to register. Submissions are rejected outright if any such employee lacks one. Use ITREG or BundleReg on eFiling or e@syFile.
Getting registered without the guesswork
Employer registration is not difficult, but it is easy to leave a piece out — registering for PAYE and forgetting the Department of Labour UIF registration, or missing SDL when payroll crosses R500,000, or discovering in May that none of your employees have income tax numbers and the EMP501 will not submit.
Smartbook handles employer registration and then runs payroll monthly — payslips, PAYE, UIF, SDL, EMP201s and the EMP501 reconciliations — starting at R750 a month for teams of one to five.
Need PAYE registration as a once-off? →
Last reviewed: 26 July 2026. Written by the Smartbook team — SAIPA and SAICA accredited, SARS registered tax practitioners. Figures are for the 2026/27 tax year. Worked examples are illustrative. General guidance, not advice on your specific circumstances.
Primary sources: SARS — Budget 2026 Frequently Asked Questions · SARS — Pay As You Earn · SARS — Completing the monthly employer declaration (EMP201) · SARS — Voluntary Disclosure Programme