The skills development levy is a compulsory monthly payment that most South African employers make to SARS, calculated at 1% of their total payroll. SARS collects the money, but it does not keep it. Instead, a large portion flows to the Sector Education and Training Authorities (SETAs), which fund learnerships, apprenticeships, and workplace training in each industry.
Understanding how this levy moves from your employer’s payroll to a training grant helps you see where funding for skills programmes actually comes from in 2026.
What the Skills Development Levy Is
The skills development levy is governed by the Skills Development Levies Act. Its purpose is to fund workplace learning across the country. Because the money is ring-fenced for training, it is one of the main reasons learnerships and internships can be offered at scale.
For students and job-seekers, this matters directly. When you enter a learnership, a stipend or the training cost is often covered by grants that trace back to this levy. In other words, the levy your employer pays helps finance the very programmes you might apply for.
How the Skills Development Levy Works
The process has two clear halves: collection and disbursement. SARS handles collection, while the SETAs and the National Skills Fund handle the spending side.
- An employer calculates 1% of its total monthly payroll, including salaries, wages, overtime, and most allowances.
- The employer pays this amount to SARS each month, together with PAYE and UIF, using the same monthly declaration.
- SARS collects the levy and channels it onward. A portion goes to the National Skills Fund, and the larger share is allocated to the relevant SETA for that employer’s sector.
- The SETA uses these funds to pay grants back to employers who submit training plans and reports, and to fund learnerships, bursaries, and skills programmes.
The split between the SETAs and the National Skills Fund, along with the exact grant categories, is set out in the Skills Development Levies Act and the Department of Labour regulations. Because these percentages can be adjusted, confirm the current figures on the official sources before relying on a specific number.
| Stage | Who is responsible | What happens |
|---|---|---|
| Collection | SARS | Levy of 1% of payroll paid monthly with PAYE and UIF |
| Allocation | SARS | Funds split between SETAs and the National Skills Fund |
| Disbursement | SETAs | Grants and learnership funding paid to employers and training bodies |
Who This Applies To
The levy applies to employers, not to individual employees, so nothing is deducted from your salary for it. However, some employers are exempt.
- Employers whose total annual payroll falls below the threshold set in the Skills Development Levies Act do not have to register or pay.
- Certain public bodies and some religious or charitable organisations are also exempt.
- Employers above the threshold must register with SARS for the levy and pay it every month.
As a student or new employee, you benefit indirectly. If your employer pays the levy and claims SETA grants, you are more likely to find funded learnerships and internal training in that workplace. The exact payroll threshold for exemption can change, so verify it on the SARS site for the current tax year.
How to Access Funding Linked to the Levy
You cannot pay or claim the skills development levy yourself, because it is an employer obligation. What you can do is position yourself to benefit from the training it funds.
- Find your sector’s SETA. Each industry has one, for example the banking, manufacturing, or services SETA, and each publishes its own learnership and bursary opportunities.
- Apply for advertised learnerships and skills programmes through the SETA or through employers that partner with it.
- If you are an employer, register for the levy with SARS, then submit a Workplace Skills Plan and Annual Training Report to your SETA to claim the mandatory grant.
- Track discretionary grants, which SETAs award for specific priority skills and learnerships beyond the mandatory grant.
For employers, the practical entry point is the SARS monthly declaration, where the levy is paid alongside PAYE. The SETA side then requires annual reporting to recover grants, so keeping accurate training records is what turns the levy into recoverable funding.
Where to Verify This
Because the levy rate, exemption threshold, and grant rules are set by legislation and can change, confirm the current details on the official sources before acting.
- South African Revenue Service (SARS) for levy registration, the 1% rate, and monthly payment through PAYE.
- Department of Labour for the Skills Development Levies Act, SETA structures, and grant regulations.