Provisional Tax for South African Small Businesses: A Plain-Language Guide for 2026

Provisional tax catches more South African small business owners off guard than almost any other compliance obligation. Not because it is complicated — it is not — but because nobody explained it to them when they registered their company or started earning freelance income. Then August arrives and SARS sends a reminder, or February passes and a penalty letter follows, and suddenly it feels like a crisis.

It is not a crisis. It is a manageable, predictable system once you understand how it works. This guide explains what provisional tax is, whether it applies to your business, when the 2026 deadlines are, how to calculate what you owe, and — critically — how to avoid the penalties that catch most SMEs out.

What provisional tax actually is

Provisional tax is not a special separate type of tax but simply a mechanism to pay your taxes during the tax year instead of having a large amount due to SARS on assessment when you submit your Income Tax return.

If you earn a salary, your employer deducts PAYE from every payslip and pays it to SARS monthly on your behalf. By the time you file your annual tax return, most of what you owe has already been paid. Provisional taxpayers do not have an employer doing this for them — so SARS requires them to estimate their annual income and make advance payments themselves.

SARS wants provisional taxpayers to have an even cash flow and avoid paying one large — potentially crippling — chunk of tax in February, so they ask that two payments are made during the tax year at the end of August and end of February, with an IRP6 required for each one. The tax paid from the first and second payments is then taken off any tax owing at the end of tax season and can be refunded by SARS if too much was paid.

Who must pay provisional tax

Companies automatically fall into the provisional tax system. There is no longer a registration or deregistration process to be a provisional taxpayer. The onus is on the taxpayer to determine if they are liable for provisional tax.

For individuals and sole proprietors, you are a provisional taxpayer if you earn income that is not remuneration paid through the PAYE system:

• Income from running your own business or freelancing
• Rental income above R30,000 per year
• Investment income, dividends, or interest above the tax threshold

If you earn income from freelancing or running your own business and your total taxable income is above the tax threshold, you will be a provisional taxpayer. The tax threshold for the 2026 tax year is R95,750 if you are under 65.

If you earn a salary but also have a side business, rental income, or other non-employment income, you may be both a PAYE taxpayer and a provisional taxpayer simultaneously.

Who is exempt: Natural persons who do not derive income from carrying on any business are excluded from provisional tax if their taxable income from all sources does not exceed the annual threshold. A salaried employee with only a small amount of interest income — below R30,000 annually — does not need to register for provisional tax.

The 2026 provisional tax deadlines

The provisional tax year runs from 1 March to the last day of February. For most individuals and companies with a February year-end, the key dates for 2026 are:

First payment — 31 August 2025 (already passed)

The first IRP6 return and payment covering the first six months of the tax year. Your first provisional payment was due by 31 August 2025 — shifted to Friday 29 August because the 31st fell on a Sunday.

Second payment — 28 February 2026 (passed)

Companies with a financial year ending February must file and pay their second-period provisional tax by 28 February 2026. Because 28 February 2026 falls on a Saturday, payments should be made by Friday 27 February.

Third payment — 30 September 2026 (optional top-up)

A third top-up payment is optional — only if your earlier estimates were too low and you want to top up your payments before your final assessment. This is not compulsory but can reduce or eliminate underestimation penalties.

Final tax return — approximately 19 January 2027

Provisional taxpayers and trusts are expected to file their final annual return until approximately 19 January 2027. This is when you reconcile your actual income against your provisional estimates and settle any remaining balance — or claim a refund if you overpaid.

How to calculate your provisional tax payment

The calculation follows this logic: estimate your total taxable income for the full year, apply the relevant tax rate, subtract any rebates, subtract tax already paid (PAYE or first period payment), and pay the balance.

Step 1 — Estimate your taxable income

This is your total income from all sources for the year, less allowable deductions. For a business, this means revenue minus legitimate business expenses. Be realistic. SARS can charge you a penalty if you underestimate your income.

Step 2 — Apply the tax table

SARS publishes annual tax tables. For the 2026 tax year the rates range from 18% on the first bracket up to 45% on income above R1,817,000. Use the table on SARS eFiling or at sars.gov.za to calculate the tax on your estimated income.

Step 3 — Subtract rebates

Individuals subtract the primary rebate (R17,235 for the 2026 tax year for those under 65) and any applicable additional rebates. Companies apply the corporate tax rate — 27% flat — without individual rebates.

Step 4 — First payment: pay half

For the August payment, pay half of your estimated annual tax liability. You do not need your books finalised — this is an estimate.

Step 5 — Second payment: pay the balance

By February, SARS expects your estimate to be close to reality. Pay the full estimated annual liability minus what you already paid in August.

The basic amount shortcut (for taxpayers below R1 million)

If you expect your taxable income to be below R1 million for the year, you can use the “basic amount” — the taxable income from your most recent SARS assessment — as your estimate, adjusted upward by 8% if the assessment is more than 18 months old. This avoids underestimation penalties if your income has not grown significantly.

How to submit your IRP6 return

Register for SARS eFiling. The eFiling facility allows you to request an IRP6 return and make your submission and payments online.

If you are already registered on eFiling:

1. Log in to your eFiling profile
2. Click on Home on the top menu
3. Click on User on the left menu and then on Tax Types
4. Tick the box next to Provisional Tax IRP6 and your income tax number
5. Click on Register

To request the IRP6 form:

1. Click on Returns on the top menu
2. Click on Provisional Tax IRP6 under Returns Issued on the left menu
3. Choose the correct tax period under the Select Period drop-down list
4. Click on Request Return

Complete the IRP6 with your estimated taxable income, calculate the tax, and submit with payment via eFiling's payment function or via internet banking using the payment reference number generated on your IRP6.

Both IRP6 returns must be filed even if the calculation results in nil tax payable. If you fail to submit the required provisional tax return, SARS may estimate your taxable income and raise an assessment based on available information, which can trigger underestimation penalties, interest, and further compliance action.

The penalties you need to avoid

This is where most SMEs run into trouble — not through deliberate non-compliance but through misunderstanding what SARS penalises.

Late payment penalty — 10%

A 10% penalty on the total tax amount will be applied if your payment is even a few days late. If the deadline falls on the weekend or a public holiday, submit on the weekday before.

Interest on late payments

There is a 10% per year interest charge on late payments. Interest accrues from the due date until the full amount is settled.

Underestimation penalty

This is the penalty most SMEs do not anticipate. If your second provisional estimate is materially lower than your actual taxable income for the year, SARS levies a penalty on the difference.

If you earn R1 million or less in the year, an underestimation penalty applies if your second provisional return is less than 90% of your actual taxable income for the year. If your taxable income exceeds R1 million, the threshold is 80% — meaning SARS requires your estimate to be within 20% of reality.

The idea of “we'll fix it at the annual return” falls apart because by the time you submit your ITR14, SARS has already formed a view of your risk profile.

Non-submission

If a provisional taxpayer fails to submit their final provisional tax return within four months after the end of the year of assessment, SARS will automatically treat this as an estimate of nil taxable income. If the Commissioner believes the taxpayer's estimate is unrealistic or understated, SARS has the authority to increase the estimate unilaterally.

The February submission carries higher scrutiny than August

This is genuinely important and not widely understood.

The first IRP6 in August is understood by SARS to be an early estimate. The financial year is still unfolding, income may fluctuate, and expenses may still be uncertain. By February, however, SARS assumes your books are largely done, or at least close enough to reality to be accurate. If SARS were to audit one provisional tax return first, it would almost always be the second IRP6 — the February submission.

What this means in practice: take more care over your February IRP6 than your August one. If your actual income has come in higher than you estimated in August, correct this in February — do not push the reconciliation to the annual return. The penalty exposure on an underestimated February submission is significantly higher than on an August estimate that turned out to be conservative.

Common mistakes to avoid

Confusing provisional tax with income tax

Provisional tax is not a separate tax. It is advance payment of your income tax. The amount you pay provisionally is deducted from your final income tax liability when you file your annual return.

Not filing because you think you owe nothing

Both IRP6 returns must be filed even if the calculation results in nil tax payable. A nil payment still requires a return submission. Failure to file triggers an automatic SARS estimate and potential penalties.

Underestimating in February to delay payment

This is the most expensive mistake. The underestimation penalty is calculated on the difference between what you declared and what you actually earned — the larger the gap, the larger the penalty.

Missing the deadline because of a weekend

SARS deadlines that fall on weekends or public holidays shift to the preceding business day — not the following Monday. Your first provisional payment was due Friday 29 August because the 31st fell on a Sunday. Check each year whether the deadline shifts.

Not keeping records of income and expenses

You cannot estimate your taxable income accurately without organised records. SARS can charge a penalty if your estimates fall materially below actual taxable income. Good records protect you at both provisional tax time and at annual return time.

Frequently asked questions

I only earn a salary — do I need to pay provisional tax?

No, unless you also earn income outside of your salary such as rental income above R30,000, significant investment income, or business income. If your only income is remuneration taxed through PAYE, your employer handles your tax obligations.

My company has a March year-end, not February — are my deadlines different?

The first provisional tax payment must be made within six months of the start of the year of assessment. The second payment must be made no later than the last working day of the year of assessment. For a March year-end company: first payment by end of September, second payment by end of March. Your deadlines are determined by your financial year-end, not the calendar year.

Can I pay more than I owe provisionally?

Yes. Overpaying provisionally is not penalised. The excess will be refunded when SARS processes your annual return. Some taxpayers deliberately overpay provisionally to avoid any risk of underestimation penalties.

What if I genuinely cannot pay — can I arrange a deferral?

SARS has a debt deferral process under Section 167 of the Tax Administration Act, but it applies to assessed tax debts, not provisional tax. Contact SARS directly on 0800 00 7277 as early as possible if you anticipate difficulty meeting a provisional tax payment.

I am a director of my own company — do I pay provisional tax personally as well as for the company?

It depends on whether you earn income outside your director's salary. If you only receive a salary from your company with PAYE deducted, you are not personally a provisional taxpayer. If you receive dividends, rental income, or other non-employment income, you may be. The company files IRP6 returns separately from you as an individual.