Mastering Provisional Tax: Due 21 July 2025 – 19 January 2026

For many South African individuals and small to medium-sized enterprises (SMEs), navigating the complexities of provisional tax can be a significant challenge. However, understanding and adhering to the provisional tax requirements is not just about compliance; it's about smart financial planning and avoiding costly penalties. With the crucial deadlines of 21 July 2025 and 19 January 2026 fast approaching, now is the time to ensure your provisional tax affairs are in order.

At My Accountant, we specialise in simplifying tax for individuals and businesses, ensuring you remain compliant and can focus on what you do best. This guide will walk you through everything you need to know about provisional tax for the upcoming periods.

What is Provisional Tax?

Provisional tax is a method used by the South African Revenue Service (SARS) to collect income tax from taxpayers who earn income other than a salary that is subject to Employees' Tax (PAYE). Essentially, it's a way for SARS to collect income tax on a regular basis, rather than a single lump sum at the end of the tax year. This system helps taxpayers avoid a large tax debt at year-end and assists SARS in managing cash flow.

Who is a Provisional Taxpayer?

You are considered a provisional taxpayer if you receive income from sources other than remuneration (a salary) that is subject to PAYE. This typically includes:

• Individuals who are self-employed, freelancers, or independent contractors.
• Small business owners and partners in a partnership.
• Individuals earning rental income from properties.
• Individuals with investment income (e.g., interest, foreign dividends) above certain thresholds.
• Companies, close corporations, and trusts.

Certain individuals are exempt from provisional tax, such as those whose taxable income from sources other than remuneration, interest, dividends, and certain rental income will not exceed R30,000 for the year of assessment, or those whose taxable income is solely from a salary below a specific threshold and has no other income source requiring provisional payments. If you are unsure about your status, it's crucial to seek professional advice.

Key Provisional Tax Dates for 2025/2026

Adhering to the deadlines is paramount to avoid penalties. For the 2026 year of assessment (1 March 2025 – 28 February 2026), the provisional tax due dates are:

• First Period (1 March 2025 – 31 August 2025): The payment for this period is due by 21 July 2025. This payment covers the first six months of the tax year.
• Second Period (1 March 2025 – 28 February 2026): The payment for the full tax year is due by 19 January 2026. This payment adjusts your tax liability for the full year, taking into account the first payment.
• Third/Top-Up Payment (Optional): An optional third payment can be made usually by 30 September 2026. This allows taxpayers to top-up their payments to ensure they are fully compliant and avoid potential penalties for underestimation once their actual tax liability is known.

Missing these critical provisional tax due dates can lead to significant penalties and interest, impacting your financial health. Ensure you mark these dates in your calendar and plan accordingly.

Why is Provisional Tax Important?

Beyond legal compliance, managing your provisional tax effectively offers several strategic financial advantages for both individuals and SMEs.

Avoiding Penalties and Interest

SARS imposes strict penalties for non-compliance. Late payment of provisional tax can result in a 10% administrative penalty on the underpaid amount, plus interest charged at the prescribed rate from the day the payment was due until the payment is made. Furthermore, if you significantly underestimate your taxable income (e.g., by more than 10% if your taxable income exceeds R1 million, or more than 20% if it's R1 million or less), additional penalties may apply. Proactive provisional tax management directly translates into cost savings by sidestepping these avoidable charges.

Cash Flow Management

For businesses and self-employed individuals, managing cash flow is vital. Provisional tax, by requiring regular payments, helps spread your tax liability throughout the year. This prevents a large, unexpected tax bill at the end of the tax year, which could strain your finances or impact business operations. By setting aside funds periodically, you maintain healthier cash flow and better financial stability, crucial for effective financial planning.

How to Calculate and Submit Provisional Tax

Provisional tax is calculated using an IRP6 form. The core challenge lies in accurately estimating your taxable income for the full year of assessment.

First Provisional Tax Period (March to August)

For the first payment, due by 21 July 2025, you estimate your taxable income for the entire tax year (1 March 2025 – 28 February 2026). The payment due is generally 50% of your estimated total tax liability for the year. SARS usually bases this on your most recent assessment if no new estimate is provided, so ensuring your estimate is accurate is key.

Second Provisional Tax Period (September to February)

The second payment, due by 19 January 2026, requires you to refine your estimate of your total taxable income for the full year. At this stage, you should have a clearer picture of your actual income and expenses. The total tax paid by the second period must be at least 80% of your actual tax liability for the year (if your taxable income is R1 million or less) or 90% (if over R1 million). The payment for the second period is your revised estimated total tax liability for the year, less the amount paid in the first provisional period.

Third/Top-Up Provisional Tax Payment (Optional)

While optional, making a third payment after the end of the tax year (typically by 30 September of the following tax year) can be highly beneficial. If you realise after the second payment that your income was higher than estimated, making this top-up payment helps you meet the 80%/90% accuracy requirement. This prevents or reduces potential underestimation penalties once your annual income tax return (ITR12) is filed.

Estimating Your Taxable Income

Accurate estimation is critical. Here are some tips:

• Review Past Records: Use your previous year's financial statements and tax returns as a starting point.
• Current Performance: Consider your current business performance, sales trends, and income projections.
• Known Changes: Account for any known increases or decreases in income or expenses, such as new contracts, investments, or significant business changes.
• Professional Guidance: If in doubt, consult with a tax professional. An expert can help you make a realistic estimate and avoid costly errors.

Common Mistakes Provisional Taxpayers Make

Even seasoned taxpayers can fall prey to common provisional tax errors. Understanding these pitfalls is the first step in avoiding them.

Underestimation of Income

The most frequent mistake is underestimating your annual taxable income. While it might seem tempting to pay less upfront, significant underestimation leads to severe penalties and interest charges when SARS reconciles your actual tax liability. Always aim for a realistic and slightly conservative estimate to stay on the safe side.

Missing Deadlines

The provisional tax due dates are non-negotiable. Failing to submit your IRP6 form or make payments by 21 July 2025 and 19 January 2026 will automatically trigger penalties. Keeping track of these deadlines and planning your submissions well in advance is essential. Consider using automated reminders or entrusting the process to a professional.

Incorrect Submission

Errors on the IRP6 form, such as incorrect calculations, missing information, or not submitting through the correct channels (e.g., eFiling), can lead to delays, queries from SARS, and potential penalties. Ensuring the accuracy and completeness of your submission is vital for seamless tax compliance.

Navigating Provisional Tax with My Accountant

Managing provisional tax can be complex and time-consuming, especially for busy entrepreneurs and individuals. My Accountant offers comprehensive provisional tax services designed to give you peace of mind and ensure full compliance.

Our Provisional Tax Services

We provide tailored solutions to meet your specific needs:

• Registration: Assisting new provisional taxpayers with their SARS registration.
• Accurate Income Estimation: Helping you calculate a realistic estimate of your taxable income to minimise penalties.
• IRP6 Calculation & Submission: Preparing and submitting your provisional tax returns (IRP6) accurately and on time via eFiling.
• Deductions & Allowances: Identifying eligible deductions and allowances to legally reduce your tax liability.
• SARS Queries & Resolution: Handling any queries, audits, or disputes with SARS on your behalf.
• Proactive Reminders: Ensuring you are always aware of upcoming provisional tax due dates.

Our expertise extends to all aspects of SME tax services and individual tax, offering a holistic approach to your financial well-being.

Why Choose My Accountant?

Choosing My Accountant means partnering with dedicated tax experts who understand the South African tax landscape. We offer:

• Expertise: Our team consists of qualified professionals with in-depth knowledge of SARS regulations.
• Compliance: We ensure your provisional tax submissions are accurate and compliant, protecting you from penalties.
• Peace of Mind: Let us handle the complexities, freeing up your valuable time to focus on your business or personal endeavours.
• Cost-Effectiveness: Proactive tax management and accurate submissions often lead to significant savings by avoiding penalties and optimising your tax position.
• Personalised Service: We provide tailored advice and support, understanding that every client's situation is unique.

For more detailed information on provisional tax, we recommend visiting the official SARS provisional tax guidelines.

Don't let provisional tax deadlines overwhelm you. Proactive planning and expert assistance are key to staying compliant and financially sound. Our business advisory services can help you integrate tax planning into your broader financial strategy.

Don't let provisional tax deadlines overwhelm you. Contact My Accountant today for expert provisional tax assistance and ensure your compliance.