Skills Development Levy: What South African Employers Need to Know

If you’re an employer in South Africa, understanding the Skills Development Levy (SDL) isn’t just about compliance—it’s about investing in your workforce while contributing to the country’s skills development initiatives. Whether you’re registering for the first time or need a refresher on how it works, here’s everything you need to know.

What is the Skills Development Levy (SDL)?

The Skills Development Levy (SDL) is a mandatory payment that employers make to the South African Revenue Service (SARS) to support training and education initiatives across various industries.

• Introduced in April 2000, SDL is payable monthly by employers.
• Employers contribute 1% of their total payroll towards SDL.
• SARS collects the funds and distributes them to Sector Education and Training Authorities (SETAs) and the National Skills Fund (NSF) via the EMP201 submission process.

Who Manages the SDL Funds?

While SARS collects the funds, it does not determine how they are spent. The Department of Labour and Higher Education administers the levy, ensuring the funds are used to support skills development programs that benefit both employers and employees.

Who Should Register for SDL?

Any employer who pays more than R500,000 annually in salaries must register for SDL. This applies even if your total salaries are expected to exceed R500,000 over the next 12 months.

• Employers must register with SARS and indicate their industry classification under the relevant SETA (Sector Education and Training Authority).
• Once registered, SDL payments will be activated on your SARS PAYE profile, appearing on your EMP201 form as a mandatory deduction.

How to Register for SDL?

Employers can register for SDL through the following channels:

1. SARS eFiling – The quickest and most convenient way to register online.
2. Phone Appointment – Book an appointment for a SARS consultant to assist you remotely.
3. SARS Branch Visit – Schedule an in-person appointment at a SARS branch.

Are There Any SDL Exemptions?

Yes, certain employers do not have to pay SDL. You are exempt if you fall into one of these categories:

• Your annual payroll is below R500,000 – Employers whose total remuneration does not exceed this amount over 12 months are not required to pay SDL.
• National & Provincial Public Service Employers – These employers must budget separately for training and education but are not required to contribute to SDL.
• Public Benefit Organizations (PBOs) – Nonprofits engaged in education, welfare, humanitarian, healthcare, or religious activities may qualify for SDL exemption, provided they have an exemption letter from SARS.
• Municipalities – A municipality may be exempt if the Minister of Higher Education and Training issues a certificate of exemption.

When & How Should Employers Pay SDL?

1. SDL is paid monthly alongside PAYE (Pay-As-You-Earn) and UIF (Unemployment Insurance Fund) contributions when submitting the EMP201 return.
2. Payment Deadline: SDL must be paid to SARS within 7 days after the end of the month for which the levy is payable.

• • If the 7th falls on a weekend or public holiday, payment must be made on the last business day before that date.
  • Late payments can result in penalties and interest.

Employer Record-Keeping Responsibilities

Employers must maintain proper records of all SDL-related transactions for at least 5 years.

What records must you keep?

• Payroll records – Details of salaries paid and SDL contributions deducted.
• Employee details – Financial records related to SDL payments for each staff member.
• Electronic records – Any digital files related to SDL payments as prescribed by SARS.

Why is record-keeping important?

SARS has the authority to audit employers and raise assessments for unpaid SDL if records show that an employer should have been registered but failed to comply.

Final Thoughts: Why SDL Matters

SDL isn’t just a tax—it’s a workforce investment tool. Companies that comply with SDL and engage with their SETAs can apply for training grants, enabling them to upskill their employees while recovering a portion of their levy contributions.

By staying compliant and leveraging the SDL system effectively, businesses can strengthen their workforce, improve industry competitiveness, and benefit from available funding opportunities.

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