Freelance Tax in South Africa: What You Need to Know
If you freelance or work for yourself in South Africa, you must pay tax. But it works differently from being employed. Nobody deducts PAYE for you — you must do it yourself. Here is a simple guide to freelance tax in SA.
Key Takeaways
- You must register as a provisional taxpayer with SARS
- You pay tax twice a year (August and February)
- Save 30-35% of every payment you receive for tax
- You can deduct business expenses to pay less tax
- Get a tax practitioner — it is worth the cost
How freelance tax works
When you are employed, your boss takes tax from your salary (PAYE). When you freelance, nobody does this for you. You must save money for tax yourself and pay SARS directly. This is called provisional tax.
- You pay tax in two payments per year
- First payment: end of August
- Second payment: end of February
- You estimate how much you will earn and pay tax on that
- At the end of the year, SARS calculates the exact amount
- If you paid too much, you get a refund. Too little, you pay the difference.
How much tax will you pay?
Freelancers pay the same tax rates as employees (18% to 45% depending on income). The difference is that you can deduct business expenses first, which reduces your taxable income.
- Same tax brackets as everyone else (18% to 45%)
- But you can deduct expenses (employees cannot)
- Your taxable income = total income minus business expenses
- You also pay UIF if you have employees (not for yourself)
- No SDL (Skills Development Levy) if your payroll is under R500,000/year
What expenses can you deduct?
Any expense that is directly related to earning your income can be deducted. This reduces your taxable income, which means you pay less tax.
- Internet and phone (business portion)
- Computer, laptop, tablet (depreciation over 3 years)
- Software subscriptions (Adobe, Microsoft, etc.)
- Home office (if you have a dedicated room)
- Travel to clients (petrol, Uber, parking)
- Professional development (courses, books)
- Accounting fees
- Keep ALL receipts and invoices as proof
The golden rule: Save 30-35% of everything
The simplest way to never get caught by a big tax bill is to save 30-35% of every payment you receive. Put it in a separate savings account and do not touch it. When tax time comes, you will have the money ready.
- Open a separate savings account just for tax
- Every time you get paid, move 30-35% to that account
- Do not touch this money — it belongs to SARS
- If you end up paying less tax, the extra is a bonus
- This prevents the stress of a big tax bill you cannot afford
Ready to see your own numbers?
Use the Freelance Rate Calculator