The 2026 National Budget introduces several tax updates that directly impact payroll calculations, travel reimbursements and broader client tax planning.
For accounting practitioners and payroll administrators, staying updated is essential to ensure compliance with South African Revenue Service (SARS) requirements and to avoid payroll inaccuracies, incorrect tax reporting and potential compliance risks.
Among the most important changes are the updated subsistence allowances and rate-per-kilometre travel reimbursement rates, both of which must be implemented correctly within payroll systems.
Updated Subsistence Allowances
Subsistence allowances apply when employees travel for business and incur expenses for meals and incidental costs while away from their usual place of residence.
For the current tax year, the updated daily allowances include:
- Meals and incidental costs: R570 per day
- Incidental costs only: R176 per day
These allowances apply where an employee spends at least one night away from their usual place of residence for business purposes.
If the reimbursement falls within the prescribed limits, it may be treated as non-taxable, provided that the requirements set by SARS are met.
Where an employer reimburses amounts above the prescribed limits, the excess amount must be treated as taxable income and processed through payroll accordingly.
Revised Rate-Per-Kilometre for Travel Reimbursements
Employees who use their private vehicles for business travel may receive reimbursement from employers based on the prescribed rate per kilometre.
The updated prescribed rate is:
- R4.84 per kilometre
This rate is typically used for reimbursive travel allowances, where employees are compensated for actual business kilometres travelled.
What Are the Prescribed Thresholds?
A reimbursive travel allowance will generally not be subject to PAYE if it does not exceed the prescribed threshold set by SARS.
These thresholds include the following conditions:
1. The reimbursement rate must not exceed the SARS prescribed rate
If an employer reimburses an employee above the prescribed rate of R4.84 per kilometre, the excess portion becomes taxable remuneration.
2. Business travel must not exceed 12,000 kilometres per tax year
Under the simplified reimbursive allowance method, the total business distance reimbursed may not exceed 12,000 kilometres per year.
3. No additional travel allowance may be paid
The employee may not receive a separate fixed travel allowance for the same vehicle.
If these conditions are met, the reimbursement is generally not subject to PAYE, although it must still be reported on the employee’s IRP5 under the relevant reimbursive allowance code.
When Does the Reimbursement Become Taxable?
Payroll administrators should be aware that the reimbursement may become partially or fully taxable when:
- The rate per kilometre exceeds the prescribed SARS rate
- The employee receives an additional travel allowance
- The reimbursement arrangement falls outside the simplified reimbursement method
In these situations, the excess amount must be included in taxable remuneration, and PAYE must be applied accordingly.
Payroll Tip for Employers and Practitioners
📌 Payroll Compliance Tip
To avoid common payroll errors and SARS queries:
✔ Ensure payroll software reflects the latest SARS reimbursement rates
✔ Review travel policies to ensure they align with the 12,000 km reimbursive threshold
✔ Require employees to maintain accurate travel records for business trips
✔ Verify that employees receiving reimbursive travel claims are not also receiving fixed travel allowances
Regular payroll reviews can help prevent incorrect PAYE calculations, IRP5 reporting issues and potential SARS compliance risks.
Final Thoughts
While these adjustments introduced in the 2026 National Budget may appear modest, they play an important role in ensuring accurate payroll processing and compliant tax reporting.
Accounting practitioners and payroll administrators should ensure that systems, policies and client advice reflect the updated requirements issued by the South African Revenue Service.
Proactively implementing these updates will help firms maintain accurate payroll records, compliant tax submissions and reliable advisory services for clients.