Deductible up to 27.5% of taxable income, max R350,000.
Net Profit
R 600 000,00
Income Tax
R 108 896,00
Net After Tax
R 491 104,00
Effective Rate
18.1%
Monthly Net
R 40 925,33
Provisional payments are estimates based on your total tax liability split into two equal payments. Actual amounts may vary.
Self-employed individuals (sole traders, freelancers) are taxed at personal income tax rates on their net profit (revenue minus allowable business expenses).
Provisional Tax: You must register as a provisional taxpayer and make two advance payments per year. The first is due 6 months into the tax year, the second at year-end.
RA Deductions: Retirement annuity contributions are deductible up to 27.5% of taxable income, capped at R350,000/year. This is particularly valuable for self-employed individuals who don't have employer pension contributions.
VAT: If your turnover exceeds R1 million, you must register for VAT. You can then claim input VAT on business expenses.
How are sole traders taxed in South Africa?
Sole traders (self-employed individuals) are taxed at personal income tax rates on their net profit (income minus deductible business expenses). They must also register as provisional taxpayers.
What is provisional tax?
Provisional tax requires self-employed individuals to make advance tax payments twice a year. The first payment is due within 6 months of the start of the tax year, and the second at year-end. This prevents a large lump-sum payment at assessment.
Can I deduct business expenses?
Yes. You can deduct expenses incurred in the production of income, including office rent, equipment, travel, professional fees, insurance, and a portion of home office expenses (if you have a dedicated workspace).
Do I need to register for VAT as a sole trader?
If your taxable turnover exceeds R1 million in any 12-month period, you must register for VAT. Below that threshold, registration is voluntary but may be beneficial if you have VAT-registered clients.
How tax works when you work for yourself, and what you can claim
How is self-employment income taxed?
Self-employment income is taxed at the same progressive rates as employment income — 18% to 45%. The key difference is that no employer withholds PAYE for you. You must register as a provisional taxpayer with SARS and make two payments per year. Your taxable income is your business revenue minus allowable business expenses.
What business expenses can I deduct?
You can deduct any expense incurred in producing your income. Common deductions include home office costs (if you have a dedicated room), vehicle expenses, computer and phone costs, internet and electricity, professional fees, insurance, advertising, and accounting fees. If your revenue is R600,000 and expenses total R200,000, you only pay tax on R400,000.
How do I claim home office expenses?
If you use a room in your home exclusively for work, you can claim a proportional share of rent or bond interest, rates, electricity, and home insurance. Calculate the percentage as the office floor area divided by total home area. A 15 square metre office in a 120 square metre home is 12.5%. If your monthly bond interest is R12,000, you can claim R1,500 per month.
Do self-employed people pay UIF?
Self-employed people are not required to register for or pay UIF. UIF only applies to employees. This means you are not entitled to UIF benefits if your business fails. It is advisable to save separately for emergencies — financial planners recommend keeping 3-6 months of living expenses in an accessible savings account.
How do provisional tax payments work?
You make two compulsory payments per year: the first by 31 August (6 months into the tax year) and the second by 28 February. Estimate your total annual income and pay roughly half with each instalment. If you earn R500,000, each payment would be about R55,000-R60,000. Under-estimating by more than 20% on the second payment triggers penalties.
Should I register for VAT as a self-employed person?
You must register if your taxable turnover exceeds R1 million in 12 months. Voluntary registration is possible above R50,000. VAT registration means charging 15% on your invoices and claiming back VAT on business purchases. This benefits you if your expenses have significant VAT content (equipment, supplies). But it adds admin — VAT returns every two months.
Can I contribute to a retirement fund?
Yes. Self-employed people can contribute to a retirement annuity (RA) fund. Contributions are tax-deductible up to 27.5% of your taxable income, capped at R350,000 per year. If your taxable income is R400,000, you can contribute up to R110,000 tax-free. At a 31% marginal rate, that saves R34,100 in tax while building retirement savings.
What records must I keep?
SARS requires you to keep all business records for at least 5 years. This includes invoices issued and received, bank statements, receipts for all expenses, contracts, and vehicle logbooks. Good record-keeping is essential — if SARS audits you and you cannot prove an expense, they will disallow the deduction and add interest and penalties.
SARS-Aligned: Based on 2025 SARS rates and thresholds. For personal advice, speak to a qualified tax practitioner.
Disclaimer: This calculator provides estimates based on current HMRC rates and thresholds for the 2025/26 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified accountant or tax adviser before making financial decisions. Read our terms
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