SARS Updates Prescribed Rate per Kilometre for 2026/27

Posted 02 March 2026 Written by Acts Online
Category Tax

Brought to you by SA Accounting Academy: The South African Revenue Service (SARS) has revised the prescribed rate per kilometre for motor vehicle travel to R4.95 for the 2026/27 year of assessment.

In terms of section 8(1)(b)(ii) and (iii) of the Income Tax Act, No. 58 of 1962, the Commissioner has issued Government Notice 7182, published in Government Gazette No. 54228. This notice fixes the rate per kilometre in respect of motor vehicles used for business purposes, increasing the simplified tax-free reimbursement rate from R4.76 to R4.95 per kilometre.

The revised rate is effective for years of assessment commencing on or after 1 March 2026. This rate applies specifically to circumstances where an employee is reimbursed by an employer for business travel using a private vehicle, provided that:

  • The reimbursement is based on the actual distance travelled for business purposes;
  • No other form of compensation, such as a fixed travel allowance, is received by the employee for that same vehicle; and
  • The total distance reimbursed does not exceed the limits prescribed by the Commissioner, where applicable.

Where an employer reimburses an employee at a rate exceeding R4.95 per kilometre, the portion exceeding this rate is regarded as remuneration and is subject to the deduction of employees’ tax (PAYE), regardless of the distance travelled.

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

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

  • For yourself: Maintain a detailed logbook for the 2026/27 tax year to ensure that business travel claims against any travel allowance or tax-free reimbursements are fully substantiated for SARS audit purposes.
  • For your business: Update payroll and expense management systems to reflect the new R4.95 rate for all business travel claims processed on or after 1 March 2026 to ensure correct tax treatment and PAYE withholding.
  • For your clients: Advise clients to review their travel reimbursement policies; if they pay above the R4.95 threshold, they must ensure the excess is correctly captured as taxable remuneration on the employee’s IRP5 certificate.

Originally published at https://accountingacademy.co.za/news/read/new-sars-tax-free-rate-per-km-5

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