Understanding PAYE and UIF for Employers
Complete guide for employers on calculating and managing PAYE and UIF contributions.
As a South African employer, understanding PAYE and UIF is essential for payroll compliance. This comprehensive guide covers your obligations, calculation methods, submission requirements, and best practices for managing these critical employment taxes.
Employer Obligations Overview
Key Responsibilities
- • Register as an employer with SARS
- • Calculate and deduct PAYE from employee salaries
- • Contribute to UIF (employer and employee portions)
- • Submit monthly EMP201 declarations
- • Issue IRP5 certificates annually
- • Maintain accurate payroll records
- • Handle employee tax queries and disputes
PAYE Calculation for Employers
PAYE (Pay As You Earn) is calculated using the employee's annual salary and the progressive tax brackets. Here's how to calculate it correctly:
Monthly PAYE Calculation Process
- Step 1: Determine employee's gross monthly salary
- Step 2: Calculate annual salary (monthly × 12)
- Step 3: Apply tax brackets to annual amount
- Step 4: Subtract applicable rebates
- Step 5: Divide annual tax by 12 for monthly PAYE
- Step 6: Deduct from employee's salary
UIF Contributions Breakdown
Employee Contribution
1%
of gross salary (max R177.12/month)
Automatically deducted from salary
Employer Contribution
1%
of gross salary (max R177.12/month)
Additional cost to employer
Monthly EMP201 Submission
EMP201 Declaration Requirements
Due Date
7th of the following month
Late submissions incur penalties
Required Information
- • Total PAYE deducted
- • UIF contributions (employee & employer)
- • SDL contributions (if applicable)
- • Employee count and details
Common Employer Mistakes
Avoid These Costly Errors
- • Incorrect PAYE calculations: Always use annual calculation method
- • Late EMP201 submissions: Set calendar reminders for the 5th of each month
- • Missing UIF contributions: Ensure both employee and employer portions are paid
- • Incorrect employee details: Verify tax numbers and personal information
- • Failure to update employee changes: Report salary changes and new employees promptly
- • Inadequate record keeping: Maintain payroll records for 5 years
Annual IRP5 Certificates
IRP5 Certificate Requirements
Due Date
By 31 May following tax year-end
Must be issued to all employees
Required Information
- • Total earnings for the year
- • PAYE deducted monthly
- • UIF contributions
- • Pension fund contributions
- • Medical aid contributions
Calculate PAYE and UIF
Use our comprehensive salary calculator to accurately determine PAYE, UIF, and other deductions for your employees.
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