The skills development levy is one of the few taxes that is designed to be given back to you. Most employers never collect it, largely because nobody has explained clearly where it goes.
What you pay
The levy is 1% of your total payroll, the leviable amount, paid monthly to SARS alongside PAYE and UIF. It is not deducted from employees. It comes out of the business.
Employers with an annual payroll under R 500 000 are exempt. Everyone above that pays, every month, whether or not they ever claim anything back.
On a payroll of R 20 million, that is R 200 000 a year.
Not sure where your own submission stands? Send us a payroll summary and we will tell you what you have been entitled to and what has actually been claimed.
Request a call backWhere it goes
Once SARS collects it, the money splits.
| Share | Goes to | What it funds |
|---|---|---|
| 20% | National Skills Fund | National priorities. You do not see this again. |
| 80% | Your SETA | Split again into grants and SETA administration. |
Of the portion that reaches your SETA, two allocations matter to you directly.
Where one year of your skills development levy goes
SARS collects 1% of your payroll every month. This is what happens to it, as a share of the total levy paid.
- 20%Mandatory grant. Returned to you on a compliant WSP and ATR lodged by 30 April.
- 49.5%Discretionary pool. Applied for competitively, in windows the SETA sets. Not proportional to what you paid.
- 10.5%SETA administration. Does not come back.
- 20%National Skills Fund. Funds national priorities. Does not come back.
Route one: the mandatory grant
20% of your levy, returned to you. The conditions attached to this one are published in advance by every SETA, which is what makes it the recoverable half.
This is the predictable money. It is not competitive, it is not discretionary, and it is not a favour. The single condition is a compliant Workplace Skills Plan and Annual Training Report lodged with your SETA by 30 April.
Submit properly and it comes back. Miss the deadline and it does not. There is no appeal.
On that R 200 000 levy, the mandatory grant is R 40 000 a year.
Route two: discretionary grants
49.5% of levy income sits in a discretionary pool.
This is the larger and more misunderstood pot. It is important to be precise about what it is: 49.5% of the SETA's total levy income is allocated to discretionary grants. It is not 49.5% of your levy waiting for you to claim it.
Discretionary grants are applied for competitively, in windows that open and close on the SETA's schedule, to fund specific things:
- Learnerships
- Apprenticeships and artisan development
- Bursaries
- Skills programmes and internships
- Recognition of Prior Learning projects
Because they are competitive, they can be worth considerably more than your own levy contribution, or nothing at all. A well-motivated learnership application from an employer with a clean submission history and real roles to fill is a strong application. The same application from an employer with no submission record is not.
The mandatory grant is what you are owed. The discretionary grant is what you can win. Employers who only think about the first are leaving the larger number on the table.
The part almost nobody claims
Beyond the grants, learnerships carry a tax allowance under section 12H of the Income Tax Act. There is a deduction when a registered learnership agreement is entered into, and another on completion, with a higher amount for learners with disabilities.
So a properly run learnership can pay three ways: discretionary grant funding, a tax deduction, and B-BBEE scorecard points. Plus the qualified person at the end of it, which was supposed to be the point.
Putting the arithmetic together
Take an employer with R 20 million on payroll:
- R 200 000 paid in levy over the year
- R 40 000 back as a mandatory grant, on a compliant submission
- Discretionary funding available by application, often larger, never automatic
- Section 12H allowances on any registered learnerships
- 20 scorecard points in play on the B-BBEE Skills Development element
Versus the employer who submits nothing: R 200 000 out, nothing back, and a priority element on the scorecard with no evidence behind it.
The difference is not the money spent. It is the paperwork.