Heads Up - Tax & VAT Changes for 2025/2026

Heads Up - Tax & VAT Changes for 2025/2026

• 24 March 2025
• Individuals Tax
• IAC - The Professional

The 2025/2026 budget in South Africa brings significant tax and related changes that will affect individuals and businesses through adjustments to VAT, income tax, and various other financial regulations.

Income Tax Stuff

• Tax rebates and the income tax brackets aren't changing.  
• If you're getting a salary, the tax you pay is calculated according to a specific table.  
• There are some rules about who needs to pay provisional tax (that's for people who earn money that's not a salary, like freelancers).  
• When you take money out of your retirement fund, that's taxed according to another set of rules.  
• Money you get from dividends (like from shares) is generally exempt from income tax, but there's a dividends tax.  
• If you earn interest, some of it is tax-free, especially if you're older.  
• There's a new retirement system where if you take money out of the savings component, it gets taxed.  
• You can claim some money back for medical expenses.  
• If your employer gives you a travel allowance, there are specific rates for claiming deductions, and you need a logbook.  
• If you have to travel for work and stay overnight, there are set amounts for what you can claim for meals and stuff.  
• If your employer gives you a car as a perk, that's also taxed.  
• If you get an interest-free or low-interest loan, that's also seen as a perk and gets taxed.  
• Child maintenance payments might get some changes in how they're taxed.  
• Transfer duty (which you pay when you buy property) is changing from 1 April 2025.  

Other Taxes

• Royalties paid to non-residents are taxed.  
• Estate duty (tax on what you leave behind when you die) is levied on the value of the estate.  
• Donations tax is what you pay when you give away property.  
• Securities Transfer Tax is for when shares are transferred.  
• Skills Development Levy (SDL) is paid by employers.  
• Unemployment Insurance Fund (UIF) contributions are paid by both employers and employees.  

VAT (Value Added Tax)

• VAT is going up! It's currently 15%, but it'll increase to 15.5% from 1 May 2025, and then to 16% from 1 April 2026.  
• There are some specific rules and changes proposed for how VAT is applied to things like airtime vouchers, exports, businesses being sold, online shopping, insurance, and valuable metals.  
• The government's planning to add more food items to the list of basic foods that are zero-rated for VAT, to help people with the rising cost of living.  

Carbon Tax

• The carbon tax is also going up, as part of the country's plan to deal with climate change.  

Other Tax Changes

• There might be some changes to the tax on smartphones to make them more affordable.  
• There's a tax incentive to encourage businesses to employ young people, and the rules around that are being adjusted.  
• Interest rates for things like late tax payments and refunds are also changing.  
• Rules about deducting interest and international tax are also being looked at and changed.  
• There are specific rules for how the VAT rate change affects things like ongoing contracts.  

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