EMP201 Payment Plans: What Employers Need to Know

Managing payroll taxes is one of the most important compliance responsibilities for South African employers. SARS classifies payroll taxes as “moral taxes” because these amounts are deducted from employees and contractors and must be paid over promptly. When they aren’t, SARS applies strict penalties and interest — especially on PAYE and UIF.

If you’re unsure how EMP201 payment plans work or what to do during cash flow challenges, this guide explains everything clearly.

1. What Are “Moral Taxes” in Payroll?

Payroll taxes declared on the EMP201 include:

• PAYE (Pay-As-You-Earn)

• UIF (Unemployment Insurance Fund)

• SDL (Skills Development Levy)

• Contractor withholding tax (where applicable)

These are called moral taxes because they belong to employees and SARS — not the business.Using this money for operational expenses is considered a serious payroll compliance risk.

2. EMP201 Taxes Must Be Paid in Full the Following Month

Your EMP201 return must be submitted and paid:

By the 7th of the following month(or previous working day if the 7th is a weekend or public holiday).

Examples:

• January payroll → due 7 February

• February payroll → due 7 March

SARS requires full payment. Early partial payments or pre-due-date payment plans are not permitted.

3. Penalties and Interest for Late or Partial PAYE Payments

If the EMP201 is filed late or underpaid:

• A 10% late payment penalty is automatically charged

• Interest accrues daily until the full amount is paid

These charges form part of your outstanding payroll tax debt and cannot be ignored.

4. If You Have Cash Flow Issues — Pay What You Can Afford

If you cannot settle the entire EMP201 on time:

• Make any payment you can afford before the due date

• Inform your accountant of the shortfall immediately

Paying a portion decreases the final interest charge and shows SARS you are actively trying to reduce the debt.

5. SARS Payment Arrangements (6 Months) — Only Available After the Amount Is Late

A common misconception is that you can request a payment plan early.You cannot.

SARS only allows payment arrangements when:

• The EMP201 is overdue

• The 10% penalty has been added

• Interest is calculated

• The liability appears as debt on the SARS system

Only then can your accountant apply for a 6-month SARS payment plan.

6. Why Payment Plans Cannot Be Requested Before the Due Date

Before the due date:

• The tax is not yet “due and payable”

• No debt exists on the system

• SARS cannot legally restructure the amount

This is why all EMP201 payment plan requests must be made after the due date.

Final Guidance for South African Employers

Payroll taxes are high-risk compliance items. To manage them correctly:

1. Communicate early with your accountant if a cash flow issue is expected

2. Pay whatever you can before the deadline

3. Understand that penalties and interest will apply

4. A payment plan can be arranged only after the liability becomes overdue

Correct handling of EMP201 payments protects your business from escalating penalties, audits, and compliance risks.