As an employer, if you submit a Workplace Skills Plan (WSP) and an Annual Training Report (ATR) then 20% of the levies that you’ve paid will be paid as a mandatory grant towards your company.

A Skills Development Levy (SDL) is a levy imposed to encourage learning and development in South Africa and is determined by an employer’s salary bill. The funds are paid to the South African Revenue Services (SARS) and are to be used to develop and improve skills of employees.

As an employer, you’re required to pay the skills development levy every month if:

• you’ve registered your employees with SARS for tax purposes (Pay As You Earn (PAYE)), and
• if you pay over R500 000 a year in salaries and wages to your employees (even if they’re not registered for PAYE with SARS).

You’ll need to pay 1% of the total amount paid in salaries to employees, including the following:

• overtime payments
• leave pay
• bonuses
• commissions
• lump sum payments

The levies paid to SARS are put in a special fund and are divided in:

• 80% is distributed to the different Sector Education and Training Authority (SETAs).
• 20% is paid into the National Skills Fund. SETAs pay grants to employers in terms of the SETA Grant Regulations. Some of the conditions include:
• an employer employing 50 or more employees must apply for a WSP and an ATR, and
• that they must apply for a mandatory grant within 6 months of registration.

These grants are called mandatory grants that employers get after structuring their Work Skills Plan (WSP). After getting this grant, employers use it to train their employees. This gets paid to the employers in cash which gets transferred to their accounts and it depends on the amount that they’ve contributed as a skills levy.

The National Skills Fund supports skills development projects that don’t fall under the SETAs. The primary focus of the business is determined by analysing what approximately 60% of your employees do.

The fund enables the state to:

• drive key skills strategies,
• meet the training needs of the unemployed, non-levy paying cooperatives, non-governmental organisations (NGOs), community structures and vulnerable groups,
• promote strategic partnerships and innovation in project delivery,
• drive change towards partnership-based programmes, and
• contribute significantly to raising the low base of education and training in our country, guided by our government policies of redress, and promoting equity.

Before you can pay the skills development levy (SDL), you’ll need to register with SARS and you’ll also need to indicate which SETA you belong to when you register with SARS.

Employers who fall under more than one SETA must consider the following when deciding which one is best for their workplace based on the following:

• composition of the workforce,
• pay of the different workers, and
• training needs of the different workers.

Levies are payable to SARS, which acts as a collecting agency for the applicable SETA.

It must be paid within 7 days after the end of the month during which the amount was deducted. If the last day for payment falls on a public holiday or weekend, the payment must be made on the business day before the public holiday or weekend.

The following payment methods are available:

• eFiling
• Electronic payments through the internet (EFT)
• At a branch of one of the relevant approved banking institutions. Cheque payments may not exceed R50 000. This limit applies irrespective of the number of tax periods being paid or should multiple cheque payments be made.
• At a specific SARS branch, cheque payments may not exceed R50 000. This limit applies irrespective of the number of tax periods being paid or should multiple cheque payments be made.

SETAs focus on providing skills development and training to people employed or seeking employment in their sectors. They are tasked with developing skills development plans in response to the skills needs in their sectors. 

*(which is informed by research of the sector to establish what skills are required)