Reimbursive travel allowance — the SARS rate per kilometre explained
A reimbursive travel allowance pays an employee a rate per business kilometre actually travelled. Where the rate does not exceed the SARS prescribed rate and no other travel allowance is paid, the reimbursement is not subject to PAYE and is reported under code 3703. Anything above the prescribed rate is taxable and reported under code 3702.
Payroll Africa Editorial · SARS Payroll Compliance Team
The Payroll Africa editorial team is composed of registered tax practitioners, payroll administrators and BCEA specialists who maintain the SARS PAYE, UIF, SDL and ETI engines that power the platform. Every article is reviewed against the current SARS BRS and Basic Conditions of Employment Act before publication.
- SARS registered tax practitioners
- SAPA-affiliated payroll administrators
- BCEA and LRA compliance reviewers
Last updated 26 Aug 2026
Prescribed rate, and what happens above it
SARS publishes a prescribed rate per kilometre each tax year. Reimbursing at or below that rate keeps the payment outside monthly PAYE. Reimbursing above it splits the payment: the portion up to the prescribed rate stays non-taxable, and the excess is remuneration subject to PAYE in the month it is paid.
The old 12,000km non-taxable limit fell away — since the 2019 year of assessment, the test is the rate, not the distance, although the 8,000km mark still determines which code is used on the IRP5.
- Reimburse at or below the SARS prescribed rate per km
- Excess above the prescribed rate is taxable remuneration
- Business kilometres only — home to office does not qualify
- A logbook or trip claim must support every kilometre
- The prescribed rate changes annually from 1 March
Codes 3702 and 3703
Code 3703 is used where the reimbursement is at or below the prescribed rate and the employee receives no other travel allowance. Code 3702 is used where the rate exceeds the prescribed rate or where a fixed travel allowance is also paid — that amount is included in remuneration for PAYE.
Paying a fixed travel allowance and a reimbursement to the same employee changes the treatment of the reimbursement entirely, so decide on one structure per employee.
- 3701 — fixed travel allowance, 80% included in remuneration
- 3702 — taxable reimbursive travel above the prescribed rate
- 3703 — non-taxable reimbursive travel at or below the rate
- Never use 3703 alongside 3701 for the same employee
- Report all three on the IRP5 even where no PAYE was withheld
Running it cleanly in payroll
The practical approach is to capture business kilometres per pay period, multiply by the company rate, and let payroll split the payment across the taxable and non-taxable codes automatically against the current prescribed rate.
Payroll Africa stores the prescribed rate per tax year, applies the split on every run, and carries both codes through to the EMP501 and IRP5 without manual journals.
Frequently asked questions
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