Provisional tax for sole traders in South Africa

If you invoice clients directly rather than receiving a salary, SARS expects you to pay income tax in advance, twice a year. Here is how it works.

What is provisional tax?

Provisional tax is not a separate type of tax. It is a way of paying your income tax in instalments during the year, rather than all at once at the end. The idea is to reduce the shock of a large year-end tax bill and ensure SARS receives money throughout the year.

Employees pay tax through PAYE (Pay As You Earn), which their employer deducts from each salary payment. Sole traders and freelancers have no employer to do this, so SARS requires them to estimate their income and make advance tax payments via the provisional tax system.

Who has to pay provisional tax?

You are a provisional taxpayer if you receive income other than a salary (or in addition to a salary) that is not subject to PAYE deductions. This includes:

→Sole traders and freelancers who invoice clients directly
→Self-employed consultants and contractors
→Anyone earning rental income, investment returns, or commission not subject to PAYE
→Individuals whose taxable income from non-employment sources is expected to exceed the threshold set by SARS (verify the current threshold at sars.gov.za)

Not sure if you qualify? If you earn more than R30 000 per year from any source other than a PAYE salary, you are very likely a provisional taxpayer. Register on SARS eFiling and check your taxpayer type, or consult a tax practitioner if you are uncertain.

The two payment deadlines

The South African tax year for individuals runs from 1 March to the last day of February. Provisional taxpayers make two payments during the year:

First paymentOn or before 31 August

Six months into the tax year. You estimate your taxable income for the full year and pay half of the estimated tax due (minus any employees' tax already deducted via PAYE on employment income).

Second paymentOn or before the last day of February

At the end of the tax year. You refine your estimate based on your actual income for the year and pay the remaining balance of the total estimated tax (minus the first payment already made).

Third payment (optional): You may make a voluntary third payment within 7 days after the tax year ends (around 7 March) to top up any remaining balance if your actual income was higher than estimated. This avoids interest charges on the underpayment.

How to calculate your payment

The calculation is done on the IRP6 form (Provisional Tax Return) on SARS eFiling. Here is the basic logic:

Estimate your total taxable income for the year

Your best estimate of net profit (revenue minus allowable expenses) for the full tax year. Use your actual figures up to the date of filing and project forward.

Calculate the tax on that income

Apply the personal income tax tables to your estimated taxable income. SARS eFiling calculates this automatically once you enter the income figure.

Subtract any tax already paid

Deduct any PAYE already withheld (if you also have salaried income) and your first provisional payment (for the second payment calculation).

Pay the balance

The result is your provisional tax payment. Pay via eFiling bank details, EFT, or at a SARS branch.

Minimum estimate rule:SARS does not allow you to deliberately underestimate to minimise advance payments. If your estimate is less than the higher of: (a) 90% of your actual taxable income for the year, or (b) the basic amount (last year's assessed taxable income), SARS will charge interest on the underpayment. When in doubt, estimate conservatively high. Any overpayment is refunded after your annual tax assessment.

How to submit on SARS eFiling

Go to efiling.sars.gov.za. Register if you have not already; you will need your ID number and tax reference number.

Navigate to Returns

Select "Returns" → "Returns Issued" → "Provisional Tax" → "IRP6". The relevant period will be listed.

Complete the IRP6

Enter your estimated taxable income, any PAYE already paid, and prior payments. eFiling calculates the tax due automatically.

Submit and pay

Submit the return and pay the amount due by EFT using the SARS payment reference number generated on eFiling. Keep the payment confirmation.

What happens at year-end?

After the tax year ends, you file your annual income tax return (ITR12), usually between July and October for individual taxpayers, depending on SARS's filing season dates. SARS assesses your actual taxable income and issues an assessment.

If your provisional payments covered your actual tax liability: SARS refunds the overpayment, or you can leave it as a credit for the next year.

If your provisional payments were short of your actual liability: SARS will issue an additional assessment for the shortfall. Significant underpayments attract interest and, potentially, understatement penalties.

Keep your invoices organised

Accurate provisional tax estimates start with accurate records of what you have earned. Every invoice you issue is a record of income, and the total of your invoices is the starting point for your tax estimate. Missing or disorganised invoices make estimation harder and increase the risk of underestimating (and being penalised) or overestimating (and overpaying).

Track your income with organised invoices

SortedNexus saves all your invoices in one place, making it easy to total up your income when provisional tax deadlines approach. Create your account to get started.

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Disclaimer: This article is for general information only and does not constitute tax advice. SARS rules, thresholds, and deadlines change each tax year. Always verify current figures and dates at sars.gov.za or consult a registered tax practitioner before making provisional tax decisions.