Is SDL 1% of gross salary?

It is 1% of the leviable amount — broadly the same base as PAYE remuneration — for the whole payroll, paid by the employer. It is never deducted from the employee.

What happens if I exceed R500,000 mid-year?

Register for SDL within 21 business days and start declaring 1% on the EMP201 from that month. SARS may raise the levy retrospectively if the expectation test was clearly met earlier.

Does SDL apply to one director drawing a salary?

Yes, if the total annual remuneration expectation exceeds R500,000. A single director on R45,000 a month is above the threshold.

Does Payroll Africa handle this automatically?

Yes. Payroll Africa applies the current SARS and BCEA rules to every payroll run and produces the EMP201, EMP501 and IRP5 files ready for SARS e@syFile.

How much does Payroll Africa cost?

From R90 per month for 2 employees, R401 for 10 and R4,182 for 200. No setup fee, free migration from Sage, SimplePay, PaySpace or a spreadsheet, cancel anytime.

SDL

SDL exemption threshold — the R500,000 payroll rule explained

An employer is exempt from the Skills Development Levy when total remuneration paid to all employees over the next 12 months is not expected to exceed R500,000. Above that, SDL is payable at 1% of the leviable amount every month on the EMP201, with no sliding scale.

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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 23 Aug 2026

How the R500,000 test works

The test is forward-looking: at the start of each month you consider the total remuneration reasonably expected to be paid to all employees over the following 12 months. Cross the R500,000 line and you must register for SDL within 21 business days and start paying 1% from that month.

R500,000 a year is roughly R41,667 a month across the entire payroll — a business with four employees on R11,000 each already exceeds it.

Who else is exempt

Aside from the R500,000 threshold, the Skills Development Levies Act exempts several categories regardless of payroll size.

Public service employers in the national or provincial sphere
Public benefit organisations approved under section 30 of the Income Tax Act carrying on welfare, humanitarian, health or religious activities
Municipalities holding a certificate of exemption from the Minister
Employers whose total annual remuneration is R500,000 or less

What counts as the leviable amount

SDL is charged on remuneration as defined for PAYE purposes, with specific exclusions. Directors' remuneration is included; amounts paid to independent contractors and pensioners are not.

Included — salaries, wages, overtime, bonuses, commission, taxable allowances and fringe benefits
Excluded — reimbursive travel within the SARS rate, retirement lump sums, and amounts paid to learners under a registered section 18(2) learnership agreement

Getting the SDL contribution back

SDL is not a pure cost. Registered employers can claim a mandatory grant of up to 20% of SDL paid from their SETA by submitting a Workplace Skills Plan and Annual Training Report by 30 April, and can compete for discretionary grants funded from the remaining pool.

Frequently asked questions

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