Getting Ready for Your Second Provisional Tax Payment: 10 Practical Tips

You have only just taken down the Christmas tree, and the last thing on your mind is your second provisional tax payment, which falls due on 27 February 2026. And no – the date is not a typo.

Although the normal due date for this payment would be the 28th of February, the general rule with any payments to SARS is that, should the normal due date fall on a Saturday, Sunday, or public holiday, the actual due date is brought forward to the last business day before the normal due date.

With that out of the way, your second thought might be, “The end of February is two months away. There’s still plenty of time to get this sorted out.”

Well … after you’ve read this article, you’ll soon realise that there isn’t quite as much time as you might have thought. Tax practitioners tend to get quite busy from around mid-January onwards, and if you leave the completion of your provisional tax return to the last week of February, you are likely to miss the deadline.

However, if you’ve read this far and realised that you don’t have a clue what provisional tax is, here is a brief explanation.

What is provisional tax?

The tax year for the vast majority of individual taxpayers runs from 1 March to the last day of February (28th or 29th, depending on whether the particular year is a leap year). This last day of February is normally the date by which any tax payments due to SARS for the year need to be paid.

However, the vast majority of people who receive any form of income usually receive it at various intervals during the year. For instance, salaries are normally received weekly or monthly.

Salary-earners will be used to the idea of tax being deducted whenever they receive a payment from their employer for services rendered. It’s called PAYE, which stands for Pay As You Earn. This tax is exactly what it says on the tin – as earnings are received, tax is deducted and paid over to SARS.

Freelancers, consultants, small business owners, and investors do not have a mechanism whereby tax is deducted at source. The main reason is that these taxpayers either receive their income at irregular intervals or have qualifying expenses that can be deducted from their income, or both.

Since it is impractical to determine the amount of tax that is to be paid on each individual receipt, PAYE would not normally be deducted from such receipts.

However, while everything comes out in the wash when you submit your annual income tax return and your liability to SARS is determined, SARS is somewhat disinclined to wait for up to 18 months to receive their tax payment from you.

Provisional tax is therefore a mechanism whereby taxpayers estimate their tax liability for the year, and then pay half thereof over to SARS in August and February each year.

While the return itself is not particularly complicated, the underlying calculations can be. For obvious reasons, you don’t want to be overpaying your tax, but at the same time, SARS can get quite nasty with their penalties if you don’t pay enough.

Accordingly, this article sets out a number of practical considerations to ensure that you not only understand how provisional tax works, whether it is applicable to you, and how you can remain compliant.

The first step is confirming whether provisional tax applies to you. You are generally a provisional taxpayer if you earn income that is not subject to PAYE, such as business income, freelance fees, rental income, or investment income. Most companies automatically fall into the provisional tax system.

If you earn only a salary with PAYE deducted, and limited interest income, you may not be required to submit provisional tax returns. When in doubt, check your SARS profile on eFiling, or consult a tax practitioner.

Missing deadlines is one of the most common and costly mistakes. Provisional tax has two compulsory payment periods:

• First provisional tax payment: End of August (six months into the tax year)
• Second provisional tax payment: End of February (end of the tax year)
• A third, voluntary payment can be made by the end of September to reduce interest if you underpaid earlier.

Put these dates into your calendar, and set reminders well in advance. A minimum of a month is suggested; longer lead times should be considered if your provisional tax computations are complex, and professional assistance is required.

Estimating your taxable income (the net amount on which your tax liability is determined) is the most important part of managing provisional tax.

For the first payment, you may base your estimate on last year’s assessed taxable income if your circumstances have not changed significantly. However, for the second payment, SARS expects a more accurate figure.

A practical approach to ensure reasonable accuracy is to:

• Calculate actual income earned to date;
• Add realistic projections for the remaining months; and
• Subtract any allowable expenses.

If your estimate is too low, SARS may impose an underestimation penalty. As a rule of thumb, aim to estimate at least 80% of your actual taxable income for the year.

Once your taxable income is estimated, calculate the tax using SARS tax tables or eFiling’s calculator. Then subtract any tax already paid, such as PAYE or the first provisional payment.

For the first provisional period (6 months ending in August), you are required to pay half of your estimated tax liability over to SARS. For the second provisional period (end-February), you need to account for your full tax liability for the year.

Many taxpayers overcomplicate this step. SARS eFiling automatically calculates the tax payable once figures are entered correctly, making it easier and more accurate.

A very practical way to avoid cash-flow problems is to treat tax like a monthly expense. Set aside a percentage of each payment you receive into a separate savings account reserved for tax.

For individuals, setting aside 25% to 30% of income is a safe starting point, although the exact percentage depends on your tax bracket. This habit ensures you have funds available when provisional tax payments are due.

You do not need complex accounting systems, but you do need accurate records. To help you to compile these records, it is suggested that you keep the following:

• Invoices issued
• Proof of income received
• Business expense receipts
• Bank statements

Updating records monthly makes provisional tax calculations easier and reduces errors. Cloud accounting software – or even a structured spreadsheet – can be sufficient for smaller operations.

Claiming allowable expenses reduces taxable income and thus lowers the amount of provisional tax that you need to pay. Common deductible expenses include the following (this list is not exhaustive):

• Office and communication costs;
• Travel and vehicle expenses (where applicable);
• Professional fees;
• Home-office expenses; and
• Wear-and-tear on equipment used for business purposes.

Ensure expenses are directly related to earning income and are supported by documentation. Avoid claiming personal expenses as business deductions, as this increases audit risk.

If you are in any doubt as to whether or not an expense qualifies for deduction, the safest route is to keep every single document, even if you shove it in a shoebox to give to your tax practitioner (see below).

SARS eFiling is the most efficient way to submit provisional tax returns and make payments. After submission, download and save confirmation notices.

It’s important to note that if you submit a payment request through eFiling, this does not complete the payment itself. You need to log in to your bank account to release the payment. Be aware of bank processing cutoff times to avoid your payment to SARS being submitted late.

Your bank will also normally allow you to generate a document as proof of payment. Make sure that you retain this, as things can go wrong and you may need to prove to SARS that your payment has, in fact, been made.

Also, ensure that you regularly log in to eFiling to check for messages from SARS. Addressing queries early prevents delays and penalties.

If your income fluctuates significantly from month to month, or if you have multiple income sources, professional assistance can be worth its weight in gold. An accountant or tax practitioner can help you estimate correctly, avoid penalties, and plan cash flow.

The cost of professional advice is often lower than the penalties and interest resulting from mistakes.

It’s important to understand that your six-monthly returns and payments are exactly what they say they are – provisional. Your returns are based on an estimate, whereas your final income tax return is based on actual income and qualifying expenses.

Once your final income tax return is submitted, SARS issues an assessment. This should include details of your income, allowable expenses, tax already paid by you (whether through PAYE or provisional tax), and will indicate whether your final tax position is a shortfall or a refund.

Conclusion

Managing your provisional tax compliance is about being proactive rather than reactive. By understanding deadlines, estimating income realistically, setting money aside regularly, and keeping accurate records, provisional tax becomes manageable.

A practical, disciplined approach reduces stress, improves cash flow, and keeps you compliant with SARS’ requirements.

WRITTEN BY STEVEN JONES

Steven Jones is a retired tax practitioner and member of the South African Institute of Professional Accountants.

While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither writers of articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes.