Jan 22, 2026 Small Business Resources
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Apr 7, 2026
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South African small business tax guide 2026: Key dates & new VAT rules
Managing a small business is a balancing act, and staying on top of SARS requirements is a non-negotiable part of the journey. As we enter the 2026/27 financial year, this guide provides the essential dates and updated thresholds you need to keep your compliance on track and your cash flow healthy.
The 2026 Budget Speech introduced significant shifts (most notably a major change to VAT registration) designed to reduce red tape for entrepreneurs. Here is how those changes translate into your key tax moments.
1. Value-Added Tax (VAT): The VAT201 Return
VAT is the 15% you add to your sales. Think of yourself as a collection agent for SARS; this money isn’t yours, you’re just holding it for them. A VAT201 is the form where you declare how much VAT you collected from customers minus the VAT you paid to your suppliers.
- The Current VAT Rate: Remains unchanged at 15%.
- What’s changed? As of 1 April 2026, the compulsory VAT registration threshold has more than doubled, increasing to R2.3 million (up from R1 million). This means small businesses earning less than R2.3 million per year are no longer required to register as a VAT vendor.
- Voluntary Registration: The minimum turnover threshold required to voluntarily register for VAT has increased to R120 000 (up from R50 000) (up from R50,000).
- Deadline: For eFiling, returns and payments are due by the last business day of the month following your tax period.
Impact: Businesses with taxable income lower than the registration threshold of R2.3 million may deregister for VAT if they do not want to be registered under voluntary registration.
2. Monthly Payroll: The EMP201 Return
If you have employees, you must deduct tax from their pay and send it to SARS. The EMP201 is a monthly declaration that combines PAYE (employee income tax), SDL (skills levy), and UIF (unemployment insurance). What’s changed for your staff? The 2026 Budget increased Medical Scheme Tax Credits to R376 per month for the main member and first dependent.
- Additional dependents increased to R254 per month. Ensure your payroll reflects this so staff receive the correct take-home pay.
- The bottom line on tax brackets: Personal income tax brackets were adjusted by 3.4% for inflation. This helps prevent “bracket creep,” so your team isn’t taxed more simply because their salaries rose to keep up with the cost of living.
- Deadline: The 7th of every month. (If the 7th is a weekend, pay by the Friday before).
3. Provisional Tax: The IRP6 Return
Provisional tax is just a way for business owners to pay their Income Tax in “pay-as-you-go” installments. An IRP6 is the form you use to estimate your profit and pay the tax on it in advance.
- 31 August 2026 (First Period): Pay 50% of your estimated total tax for the 2027 year.
- 26 February 2027 (Second Period): Your final estimate and payment for the year.
- 30 September 2026 (Third ‘Top-Up’ for 2025/26): If you under-calculated for the 2025/26 year, paying by this date helps you avoid backdated interest.
4. Filing Seasons: Employer Reconciliations (EMP501)
Twice a year, SARS asks you to prove that the monthly amounts you paid (the EMP201s) match the actual tax certificates (IRP5s) you gave your employees. The EMP501 is this final “check-up” form.
- 1 April – 31 May 2026 (Annual Filing): Covers the full year just ended (March 2025 – Feb 2026).
- September – October 2026 (Interim Filing): The half-year check for the current 2027 year.
Compliance Note: SARS now strictly validates Employee Tax Reference Numbers. Submissions with “dummy” numbers will be rejected. Make sure you avoid this mistake to avoid potential penalties.
5. Your 2026/27 Strategic Checklist
Think of this as your business “health check.” It’s about ensuring your books reflect reality so you can make better decisions for the year ahead.
[ ] Claim your Small Business Corporation (SBC) relief: If you qualify, the first R99,000 of your taxable income is now tax-free. Check with your accountant if you meet the criteria to save on the flat corporate tax rate.
[ ] Offset your “Bad Debts”: Run an Aged Receivables report in Xero. If invoices are unlikely to be paid, write them off. This lowers your taxable profit by telling SARS you never actually received that income.
[ ] Leverage the Asset Write-off: Ensure your Fixed Asset Register is updated in Xero. SARS allows “wear and tear” deductions for equipment like laptops or machinery, which reduces your tax bill.
[ ] Audit your VAT Status: Check your turnover against the new R2.3 million threshold. If you’re below the new limit, discuss with your advisor whether staying registered is still the right move for your business.
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