The monthly EMP201 and the Employment Tax Incentive
How a South African employer's monthly EMP201 is prepared from approved pay runs, and how the Employment Tax Incentive is worked out for young employees.
By Achekam · · 4 min read · For Running a business businesses in South Africa
Every month a South African employer declares what it withheld and owes on its payroll on an EMP201, and pays SARS. For a small business with a few young staff on modest wages, the same form is also where it claims the Employment Tax Incentive, which can reduce what it pays by a meaningful amount per qualifying employee.
The incentive is also where most EMP201 mistakes happen: a claim for someone who no longer qualifies, a month missed, or a claim made without the information needed to support it. This article walks through how Achekam prepares the EMP201 from payroll, how the incentive is worked out, and what is left for a person to do.
What goes into the EMP201
The EMP201 is the monthly employer declaration. It brings together the employees' tax withheld (PAYE), the Skills Development Levy and UIF contributions for the month, and any Employment Tax Incentive the employer claims against them. SARS explains how to complete and pay the declaration on its page on completing the monthly EMP201.
In Achekam, South African PAYE, UIF and SDL come from a tax table stored as data, and a pay run is refused until a named person confirms that year's table. A pay run is approved by someone other than the person who prepared it, and nobody can approve a run that pays themselves.
The monthly EMP201, including the Employment Tax Incentive, is prepared from approved runs and downloaded as a PDF. A run that has not been approved does not feed the declaration. So the first check each month is simple: have all the month's runs been approved?
Who qualifies for the Employment Tax Incentive, at the time of writing
The Employment Tax Incentive encourages employers to hire young work-seekers. At the time of writing, under the Employment Tax Incentive Act as amended by Act 3 of 2026 and in operation from 1 April 2025, the incentive for a qualifying employee aged 18 to 29 works like this:
| Monthly remuneration | First 12 qualifying months | Next 12 qualifying months |
|---|---|---|
| Below R2,500 | 60% of remuneration | 30% of remuneration |
| R2,500 to below R5,500 | R1,500 a month | R750 a month |
| R5,500 up to R7,500 | Tapers down | Tapers down |
| R7,500 and above | Nothing | Nothing |
So the incentive is worth up to R1,500 a month for a qualifying employee in their first 12 qualifying months, and up to R750 a month in the next 12, with 24 qualifying months at most.
Age and pay are not the only conditions. Before you claim for anyone, check SARS's current guide on the incentive against each employee, and keep a note of why they qualify.
Entering the minimum wage per hour
Achekam calculates the incentive per qualifying employee per month, for an employer that chooses to claim it. To do that, it needs one figure from you: the minimum wage per hour that applied for the year, entered on the tax table.
Without that figure, nothing is claimed. Achekam does not guess a minimum wage, so if the field is empty the EMP201 simply shows no incentive. When a new minimum wage takes effect, update the tax table before the first pay run it affects.
Months before April 2025 are refused
Achekam refuses to calculate the incentive for months before April 2025. The incentive amounts above apply from 1 April 2025, and the calculation is built on them.
If you are correcting an earlier month, or claiming for a period before you moved your payroll into Achekam, do that work with your accountant outside the system, under the rules that applied then, and keep the working with your payroll records.
Filing on eFiling and recording the reference
Achekam prepares the EMP201 but submits nothing to SARS. It does not pay SARS either. A person files the declaration on SARS eFiling, makes the payment, and records in Achekam the reference SARS gave.
Recording the reference is not a formality. At year end, the EMP501 reconciliation sets out, month by month, what you deducted, declared and paid beside what the tax certificates show. A month with no recorded filing is the first place a mismatch will show.
What the ledger shows in the meantime
An approved pay run is posted to the business's own ledger as a wages journal, with the amounts owed to SARS and the funds held as liabilities. Between payday and the day you pay SARS, those liabilities are the money you are holding on SARS's behalf.
That gives you a useful cross-check. After you pay, the SARS liabilities for the month should come down by what you paid. A balance that lingers month after month usually means a payment was recorded against the wrong month, or a declaration did not match the run. Look at it before the year-end reconciliation rather than during it.
A monthly routine
- Approve every pay run for the month, with a different person approving than preparing.
- Check the minimum wage per hour on the tax table is the one that applied.
- Review the list of employees for whom the incentive is claimed, and remove anyone who no longer qualifies.
- Download the EMP201 PDF and check the totals against the payroll report.
- File and pay on eFiling.
- Record SARS's reference in Achekam the same day.
The monthly declarations add up to the year-end reconciliation and the employees' tax certificates; see year-end IRP5, IT3(a) and the EMP501 reconciliation. VAT works very differently, because Achekam does not prepare the VAT201; preparing your VAT201 when your books are in Achekam explains what to take from the books instead, and South African VAT on invoice lines covers the invoices behind it.
Before next month's payroll, open the tax table and check the minimum wage per hour is filled in. If it is empty, your next EMP201 will claim no incentive at all.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
