The Skills Development Levy (SDL) is a compulsory levy paid by employers in South Africa to fund education and training for employees. It is governed by the Skills Development Levies Act and administered by SARS alongside your PAYE and UIF submissions.
What Is the SDL?
The SDL is a levy of 1% of the total payroll (leviable amount) that employers must pay to SARS. The funds are distributed to Sector Education and Training Authorities (SETAs) and the National Skills Fund to support training and development programmes across the country.
Who Must Pay SDL?
You must register for and pay SDL if your annual payroll exceeds R500,000. The levy is calculated on the total remuneration paid to all employees, including salaries, wages, bonuses, overtime, leave pay, commissions, and certain fringe benefits.
The following employers are exempt from SDL:
- Employers with an annual payroll of R500,000 or less
- National and provincial government departments (they contribute through separate mechanisms)
- Public entities listed in Schedule 1 or 2 of the Public Finance Management Act
- Religious and charitable organisations that do not trade or carry on business
- Public benefit organisations (PBOs) approved by SARS
How SDL Is Calculated
The calculation is straightforward: multiply your total monthly payroll by 1%. For example, if your total monthly payroll is R200,000, your SDL payment is R2,000 per month, or R24,000 per year.
The leviable amount includes all amounts paid or payable to employees that are subject to employees' tax (PAYE), even if no actual PAYE is deducted because the employee earns below the tax threshold.
How to Pay SDL
SDL is paid to SARS together with your monthly PAYE and UIF submissions via the EMP201 return. The due date is the 7th of each month following the month in which the salaries were paid. Late payments attract interest and penalties.
Claiming Training Grants from Your SETA
One of the benefits of paying SDL is that your business can claim back a portion through training grants from your relevant SETA. There are two types of grants:
Mandatory Grant (20% of SDL paid)
You can claim back 20% of your SDL if you submit a Workplace Skills Plan (WSP) and Annual Training Report (ATR) to your SETA by 30 April each year. This is the easier grant to claim and most employers should take advantage of it.
Discretionary Grants (up to 49.5% of SDL paid)
SETAs allocate discretionary grants for specific training projects that align with national skills development priorities. These are competitive and require detailed applications, but they can significantly offset your training costs.
SDL and Your Business
While the SDL is a cost to your business, it also creates an opportunity. By investing in employee training and submitting the required paperwork, you can claim back up to 70% of your SDL contributions. This effectively means the government is co-funding your employee development — a worthwhile return for businesses that prioritise skills development.
Use our employer cost calculator to see how SDL and other statutory costs add to your total employment expenses.