SARS Updates Prescribed Rate per Kilometre for 2026/27 [56244f]

Posted 02 March 2026 Written by Acts Online
Category Tax

Brought to you by SA Accounting Academy: The South African Revenue Service (SARS) has issued an income tax notice increasing the prescribed rate per kilometre for motor vehicles to R4.95, effective from 1 March 2026.

In terms of section 8(1)(b)(ii) and (iii) of the Income Tax Act, No. 58 of 1962, the Commissioner has fixed the rate per kilometre in respect of motor vehicles for the 2026/27 year of assessment. The notice, published as Notice 7182 in Government Gazette 54228, updates the simplified rate used for reimbursing employees for business travel.

The new tax-free rate is set at R4.95 per kilometre, an increase from the previous rate of R4.76. This rate is applicable for years of assessment commencing on or after 1 March 2026. The adjustment follows the annual review of vehicle running costs and is intended for use where no other travel allowance or advance is paid to the employee.

Under the Income Tax Act, reimbursements paid at or below this prescribed rate are not considered part of the employee’s taxable income, provided the travel was for business purposes and is supported by a contemporaneous logbook. If an employer pays a rate higher than the prescribed R4.95 per kilometre, the excess amount is subject to employees’ tax (PAYE).

Click here to download Notice 7182: Fixing of rate per kilometre in respect of motor vehicles.

What this means for you, your business, or your clients

  • For yourself: You must ensure that your business travel logbook for the period commencing 1 March 2026 accurately captures mileage to benefit from the increased tax-free reimbursement rate of R4.95 per kilometre.
  • For your business: Your payroll department or service provider must update the reimbursative travel rate settings to R4.95 per kilometre effective 1 March 2026 to ensure correct tax treatment of employee claims.
  • For your clients: You should advise clients to review their travel reimbursement policies and employment contracts to align with the new R4.95 rate, ensuring they do not inadvertently trigger PAYE liabilities by exceeding the new threshold.

Originally published at https://accountingacademy.co.za/news/read/new-sars-tax-free-rate-per-km-4

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