EMP201 monthly submissions

What the EMP201 is

The EMP201 is the monthly return every registered employer in South Africa must submit to SARS. It declares the PAYE deducted from employees, the UIF contributions from both employee and employer, and the Skills Development Levy where your annual payroll exceeds R500,000. It is a declaration and a payment in one: SARS issues a payment reference number against the return, and payment must reach them by the same deadline.

The deadline and what missing it costs

The EMP201 is due by the 7th of the month following the month being declared. Where the 7th falls on a weekend or public holiday, the deadline moves forward to the last business day before it, not back.

Late submission or late payment attracts an automatic 10 percent penalty on the amount due, plus interest at the prescribed rate. SARS applies it systematically, without a warning letter first. On a payroll with a R120,000 monthly PAYE liability that is R12,000 for being a day late, and it repeats every month it happens.

The penalty can be remitted where there is reasonable cause, and first incidence relief is available in defined circumstances, but somebody has to apply for it with grounds. Most employers simply pay it, which is why we handle the application as part of the service where a late filing has occurred.

What goes on the return

• PAYE. Employees tax deducted for the month, calculated on the current SARS tax tables including rebates and medical tax credits.
• UIF. One percent from the employee and one percent from the employer, each capped at the earnings ceiling set by the Minister, which is adjusted from time to time.
• SDL. One percent of total leviable payroll where the employer's annual payroll exceeds R500,000. Employers below that threshold are exempt but must still be registered correctly.
• ETI. The Employment Tax Incentive is claimed on the EMP201 where you employ qualifying young workers, and it reduces the PAYE payable. It is regularly under claimed by employers who qualify and do not know it.

The Employment Tax Incentive

ETI is available for employees aged 18 to 29 earning below the monthly threshold, who were employed on or after 1 October 2013 and are not connected persons to the employer. It reduces the PAYE you pay over to SARS, in the first twelve months at the higher rate and the second twelve at the lower one. Special economic zones have wider rules.

We check every payroll against the ETI criteria each month, because it is genuine money that gets left on the table. It also has to be claimed correctly, since an over claim is recovered with penalties, and it must reconcile at EMP501 time.

How this gets done wrong

The most common failure is not late filing but unreconciled filing: submitting the EMP201 from a number the payroll software produced, without checking it against the general ledger PAYE control account. The difference is discovered six months later at the EMP501 reconciliation, when correcting it means revised returns for every affected month.

We reconcile the PAYE, UIF and SDL control accounts monthly against what was declared and what was paid. Doing it every month means the EMP501 reconciliation becomes an administrative formality rather than an annual crisis.