Labour law · 3 September 2026 · 8 min read

What Employers Must Do for SARS Per Km Rate 2026 (Official R4.95/km)

Close-up vehicle odometer for travel records

For years of assessment starting on or after 1 March 2026, the SARS-prescribed rate per kilometre is 495 cents (R4.95) for the simplified reimbursive method, up from R4.76 the year before. This is the figure to load into payroll and use on individual tax returns for the 2027 year of assessment. It comes straight from SARS’s own rates table, not a third-party estimate.

TL;DR:

  • The new SARS rate for the 2027 assessment year is 495 cents per kilometre, a 19-cent increase from the previous year, applicable from March 2026.
  • Only employees who receive no other vehicle compensation besides parking or tolls can use the simplified flat rate; those with allowances or company-car benefits must use deemed-cost calculations.
  • The deemed-cost method considers vehicle value bands, fixed costs, fuel, and maintenance per kilometre, which often benefits high-value or high-mileage vehicles.
  • Accurate recordkeeping with contemporaneous logbooks, odometer readings, and supporting receipts is crucial to substantiate travel claims and avoid disallowed deductions.
  • Payroll systems must be updated before the start of the 2027 tax year to correctly apply the new rate and inclusion rules, and employing a specialized payroll service can simplify compliance.

Table of Contents

What Is the SARS Per Km Rate 2026 and Where Is It Published?

The rate applies to the 2027 year of assessment, which runs from 1 March 2026 to 28 February 2027. SARS raised the figure by 19 cents from the prior year, and the increase is confirmed on the official Rates per kilometre page.

Three documents anchor this figure legally and practically:

  • The SARS Rates per kilometre page, which states the current 495 cents figure and links to historical rates for comparison.
  • The PAYE Rate-per-Kilometre Schedule (PAYE-GEN-01-G03-A01), which contains the full deemed-cost annexure and vehicle value bands.
  • Government Gazette Notice 7182, which provides the legal basis for the rate and its effective date.

Bookmark all three. Payroll teams get audited on this, and “we used last year’s rate” is not a defense SARS accepts.

Who Can Use the Simplified R4.95 Per Km Rate?

The flat rate isn’t available to everyone with a car and a logbook. SARS restricts the simplified method to recipients who get no other compensation for use of their vehicle, aside from parking fees or toll charges.

That condition disqualifies more people than you’d think. If an employee receives a fixed travel allowance stacked on top of a separate reimbursement for the same vehicle, or has any element of a company-car fringe benefit running in parallel, the simplified rate falls away and the deemed-cost or actual-cost method takes over instead.

Common situations that knock a taxpayer out of the simplified method include:

  • Receiving both a monthly travel allowance and a separate per-trip reimbursement for the same vehicle.
  • Having fuel, insurance, or maintenance costs paid directly by the employer.
  • Using a vehicle that also carries a company-car fringe benefit under a separate scheme.

Pro Tip: If your running costs are unusually high, or the vehicle itself is expensive, the flat R4.95 rate can shortchange you. Tax advisers routinely flag that high-value or high-mileage vehicles often produce a larger deduction under the deemed-cost method, so it’s worth running both numbers before you file.

How Does the Deemed-Cost Schedule Calculate the Rate?

The deemed-cost method isn’t a single number. It’s a three-part formula built from the vehicle’s value band, and the PAYE annexure sets out exactly how each piece works.

The calculation adds together:

  1. Fixed cost, apportioned by dividing the annual fixed-cost figure for the vehicle’s value band by total kilometres traveled during the year (business and private combined).
  2. Fuel cost per kilometre, drawn from the same band table.
  3. Maintenance cost per kilometre, also band-specific.

Vehicle value bands run from entry-level to luxury pricing tiers, and the fixed-cost, fuel, and maintenance figures rise with each band. Where a vehicle was only used for part of the year for business purposes, the fixed cost is pro-rated to that period rather than applied for the full twelve months.

As a rule of thumb, high-value vehicles or anyone racking up heavy fuel and maintenance bills tends to do better on deemed-cost than on the flat R4.95 rate, precisely because those fixed and running costs get factored in individually rather than averaged into one number.

What Records Does SARS Require to Substantiate a Travel Claim?

A logbook that exists only in someone’s memory doesn’t hold up under audit. SARS expects a contemporaneous logbook that records, trip by trip:

  1. The date of each business trip.
  2. Odometer reading at the start and end of the trip (or the day, if you log daily).
  3. Total kilometres traveled and the portion that was for business.
  4. The business purpose of the trip.
  5. The destination.

Keep the logbook alongside fuel receipts and service invoices for at least five years, since that’s the standard SARS retention window for supporting documents.

Pro Tip: Pair your logbook entries with periodic odometer photos or service-center printouts. SARS reconciles logbook totals against odometer records during audits, and a logbook with suspiciously round numbers or gaps invites exactly that scrutiny.

The most common reason claims get disallowed isn’t fraud. It’s incomplete records: missing odometer readings, vague purposes like “business,” or a logbook that was clearly reconstructed after the fact rather than kept in real time.

Worked Example: Simplified Rate vs Deemed-Cost Method

Say an employee drives 18,000 km total in the year, of which 12,000 km are business kilometres, in a vehicle sitting in a mid-value band.

Simplified method:

  • 12,000 business km × R4.95 = R59,400 deduction or tax-free reimbursement ceiling.

Deemed-cost method (using illustrative band figures from the PAYE annexure):

  • Fixed cost for the band, apportioned over 18,000 total km, gives a fixed cost per km.
  • Add the band’s fuel cost per km and maintenance cost per km.
  • Multiply that combined per-km figure by the 12,000 business kilometres.

Whichever total is higher generally represents the better outcome, since the deemed-cost method captures actual fixed and running costs that the flat rate simply averages out. Taxpayers with older, cheaper vehicles and modest mileage usually find the simplified rate close enough not to bother with the extra paperwork. Those with newer or pricier vehicles should run both calculations before filing.

How Should Employers Update Payroll for the New Rate?

How Should Employers Update Payroll for the New Rate? — overview diagram

Payroll systems need updating from the start of the 2027 tax year, not mid-year. For fixed travel allowances under source code 3701, SARS applies an 80% inclusion rule by default for PAYE purposes, meaning 80% of the allowance is taxed monthly unless the employer is satisfied, with evidence, that the employee uses the vehicle at least 80% for business.

Reimbursive travel payments work differently from fixed allowances and need separate treatment in payroll and on the IRP5. Before the next payroll run, work through this checklist:

  • Update the per-km rate in payroll software to R4.95 for reimbursive payments.
  • Confirm the inclusion rate applied to each employee’s fixed travel allowance matches their actual usage evidence.
  • Refresh logbook policies and remind employees what records SARS expects.
  • Brief HR and finance on the rate change so employee queries don’t stall in a support queue.

Changing an inclusion rate mid-year without contemporaneous evidence is one of the fastest ways to trigger a payroll audit flag, so get this settled before the first pay run of the new tax year.

A Payroll Team’s Take on Getting This Right

None of that requires a compliance overhaul to fix. It requires sequence. Update the rate first, confirm every fixed allowance’s inclusion rate has documented support second, and only then send the “here’s what changed” email to staff. Skipping straight to the email and fixing the system later is how businesses end up reconciling six months of misapplied travel allowances in one uncomfortable afternoon.

— Roel

Let Expand to South Africa Handle the Payroll Side

Updating the per-km rate is the easy part. Keeping PAYE, UIF, SDL, and COIDA filings aligned with it every month, for every employee, is where in-house teams lose time. Expandtosouthafrica runs ZAR payroll, PAYE submissions through EMP201, IRP5 issuance, and every statutory filing for South African employees at a flat monthly fee, with no setup costs and no currency loading added on top.

Expandtosouthafrica

Because Expandtosouthafrica focuses on South Africa alone rather than spreading across dozens of countries, rate changes like this one get built into payroll configuration the moment SARS publishes them, not weeks later. If you’re weighing whether to keep managing this in-house or hand it to a team that already tracks every SARS threshold, check current EOR services pricing or run your numbers through the employment cost calculator to see where travel allowances fit into total employment cost before your next pay cycle.

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