Skills Development Levy explained: how employers claim back the mandatory grant

Every month, qualifying South African employers pay a Skills Development Levy (SDL) to SARS. A portion of that money can come back to your organisation as grant funding for training – but only if you plan and report on your skills development correctly. This guide explains the basics.

What is the Skills Development Levy?

The Skills Development Levy is imposed under the Skills Development Levies Act, 1999. Employers pay 1% of the total remuneration paid to employees, declared and paid to SARS each month together with PAYE and UIF.

Employers whose total annual remuneration is not expected to exceed R500 000 are exempt from paying the levy. Certain other employers – including national and provincial government departments and some public benefit organisations – are also exempt.

Where does the money go?

Levies are distributed to the skills development system: 80% goes to the Sector Education and Training Authority (SETA) your organisation is registered with, and 20% goes to the National Skills Fund. SETAs use their share to administer the system and to pay grants back to employers.

The mandatory grant: 20% of the levy you paid

The mandatory grant lets levy-paying employers recover 20% of the levies they paid. To qualify, you submit two documents to your SETA by 30 April each year:

• Workplace Skills Plan (WSP) – the training your organisation plans to deliver in the coming year, linked to your skills needs.
• Annual Training Report (ATR) – the training you actually delivered in the previous year, with supporting evidence.

Miss the deadline and you forfeit that year’s mandatory grant, so it pays to start preparing well before April.

Discretionary grants: funding for learnerships and more

SETAs also offer discretionary grants for priority programmes such as learnerships, internships, skills programmes and bursaries. Funding windows, criteria and priorities differ by SETA and change from year to year, so check your SETA’s current grant windows and apply early.

A practical checklist for employers

1. Confirm you are registered for SDL with SARS and linked to the correct SETA.
2. Appoint a skills development facilitator (SDF) to manage your WSP and ATR submissions.
3. Run a skills audit or training needs analysis so your plan reflects real business needs.
4. Keep evidence of training delivered: attendance registers, assessment results and certificates.
5. Use accredited training providers where formal credit or qualifications matter.
6. Diarise 30 April and your SETA’s discretionary grant windows.

How ICSS can help

Our consultancy unit conducts skills audits, training needs analyses and workplace training management systems that give you a defensible skills plan, and our accredited training programmes and learnerships help you deliver it.

This article is general information, not tax or legal advice. Rules and grant criteria can change – confirm current requirements with SARS and your SETA.