Skills Development Levy (SDL): Who Pays the 1% and How to Register
The Skills Development Levy is the payroll tax most employers meet by accident: payroll creeps past R500,000 a year, nobody registers, and SARS raises the levy backdated with interest at an EMP501 reconciliation. This guide explains exactly who pays SDL, how the threshold works, how to register, and how the money flows back through the SETA system to employers who bother to claim it.
- ✔SDL = 1% of the leviable payroll, employer-funded, paid monthly via EMP201.
- ✔Exemption: annual payroll of R500,000 or less.
- ✔Cross the threshold and the levy applies to the entire payroll — not just the amount over R500,000.
- ✔Register within 21 days of becoming liable (usually with your EMP101e).
- ✔SDL payments feed the SETA system — grants are claimable if you also do workplace skills planning.
What the Skills Development Levy is and who pays it
The SDL is a 1% levy on the leviable amount — essentially your total payroll (salaries, wages, overtime, bonuses, allowances and most remuneration) — imposed by the Skills Development Levies Act to fund the Sector Education and Training Authorities (SETAs). It is an employer cost: you may not deduct it from employees’ pay.
Every employer whose total annual remuneration exceeds R500,000 must register and pay. The threshold looks at the whole employer — not per employee, not per branch. Certain employers are exempt regardless of size (some public benefit organisations and religious institutions), but the R500,000 rule is the one that matters to almost every business.
The R500,000 threshold: how it actually works
| Annual payroll | SDL registered? | Monthly SDL |
|---|---|---|
| R400,000 | No — below threshold | R0 |
| R500,000 exactly | No — threshold not exceeded | R0 |
| R600,000 | Yes | R500 (1% of R50,000/month) |
| R1,200,000 | Yes | R1,000 (1% of R100,000/month) |
Exceeding the threshold makes the levy apply to your ENTIRE payroll — including the first R500,000. If you expect to cross mid-year, register and start paying from the month you become liable; do not wait for year-end.
Registration and payment
Getting value back: SETAs and grants
SDL is not purely a tax — it funds the SETA for your industry, and employers who submit a Workplace Skills Plan (WSP) and Annual Training Report (ATR) can claim back a mandatory grant of 20% of the levies paid, plus discretionary grants for learnerships and training programmes.
Most small employers never claim — either because they did not know or because the WSP/ATR admin felt heavy. If you are paying meaningful SDL, it is worth one conversation with your SETA (or an SDF consultant) to recover part of it.
To find your SETA: each industry has a designated one (Services SETA for general business, merSETA for manufacturing, CETA for construction, and so on), and your SDL payments route to it automatically via SARS. Registration with the SETA itself is usually required before you can submit a WSP — a once-off formality your SETA’s regional office handles.
Always confirm current requirements with the official source — rules and deadlines change.
- ✔SARS employer registration — R700
- ✔PAYE, UIF & SDL set up correctly
- ✔Monthly payroll submissions also available
Frequently asked questions
What is the Skills Development Levy rate?
1% of the employer's total leviable payroll, paid monthly with the EMP201. It is an employer cost — you may not deduct it from employees' wages.
Who is exempt from paying SDL?
Employers whose total annual remuneration is R500,000 or less are exempt. Certain public benefit organisations and religious institutions are also exempt regardless of size. Once you exceed R500,000 a year, the levy applies to the whole payroll.
When must I register for SDL?
Within 21 days of becoming liable — normally alongside your EMP101e employer registration, or via eFiling/a SARS branch when your payroll crosses R500,000 a year later on.
Is SDL calculated per employee or on the whole payroll?
On the whole payroll — 1% of the total leviable amount for all employees combined, declared as a single SDL figure on the monthly EMP201.
Can I get any SDL money back?
Yes — employers who submit a Workplace Skills Plan and Annual Training Report to their SETA can claim a mandatory grant of 20% of levies paid, plus discretionary grants for learnerships and training. Most small employers never claim, which is free money left with the SETA.
Last reviewed: July 2026 · How we research our guides
EmployerGuide.online provides general information about South African employer obligations — not legal, tax or professional advice for your specific situation. Laws, rates and deadlines change; confirm current requirements with the official sources linked above, or ask Admin Boss. See our disclaimer.