Below is an update on sections of the National Treasury’s Budget for the 2025/2026 tax year, tabled in Parliament on 12 March 2025.
We specifically highlight those aspects of the budget that will affect personal financial planning of individuals. A lot is unchanged, but below is a high-level summary.
INDIVIDUALS
There are no changes to the rates of tax and rebates. The maximum marginal rate for natural persons remains at 45% and is reached when taxable income exceeds R1,817,001.
The minimum tax rate remains at 18% on taxable income not exceeding R237,100.
The primary rebate for all natural persons remains at R17,235. The additional rebate for persons aged 65 years and older remains at R9,444. Persons aged 75 and older are granted a further R3,145 as before.
The tax-free portion of interest income remains at R23,800 for taxpayers under 65 years and R34,500 for persons aged 65 years and older. In addition, the tax-free savings dispensation for other approved investments, including collective investment schemes, remains at R36,000 per tax year.
An individual is exempt from the payment of provisional tax if the individual does not carry on any business and the individual’s taxable income –
- Will not exceed the tax threshold (see 4 below) for the tax year, or
- From interest, foreign dividends and rental will be R30,000 or less for the tax year.
The Section 10(1)(o)(ii) exemption for foreign employment income of tax residents remains at R1.25 million.
COMPANIES AND CLOSE CORPORATIONS
The normal tax rate remains at 27%.
The final withholding dividends tax remains at a flat rate of 20%.
TRUSTS
The flat rate remains at 45%, although distributions in the same tax year to SA resident beneficiaries are taxed in the beneficiaries’ hands
INDIVIDUAL TAX THRESHOLDS
Liability for paying is reached when your taxable income reached the following thresholds:
Under 65 years: R95,750
65 to 74 years: R148,217
75 years and older: R165,689
The tax rebates for individuals are:
Primary R17,235
Secondary (Age 65 and over) R9,444
Plus (Age 75 and over) R3,145
ESTATE DUTY AND DONATIONS TAX
The estate duty and donations tax rate remains 20% for dutiable estate amounts of R30 million or less, and increases to 25% for dutiable estate amounts over R30 million.
The estate duty exempt threshold remains at R3,5 million per person, and a surviving spouse may also benefit automatically from any unused deduction in the first-dying spouse’s estate. The rebate remains a combined maximum of R7 million for the second-dying spouse.
There is a similar treatment of Donations Tax, namely, 20% for donations of R30 million or less, which increases to 25% for donations over R30 million, being the cumulative value of all donations on or after 1 March 2018.
The first R100,000 donated in each tax year by a natural person remains exempt from donations tax. Donations between spouses are fully exempt.
CAPITAL GAINS TAX (CGT)
- The annual capital gain exclusion for individuals remains at R40,000.
- The primary residence exclusion from capital gains tax remains at R2 million.
- The capital gain exclusion at death remains at R300,000.
TRANSFER DUTY
Effective 1 April 2025, the thresholds are concessionally revised.
Property costing less than R1,210,000 will attract no duty. A 3 percent rate applies between R1,210,001 and R1,663,800, 6 percent between R1,663,801 and R2,329,300, 8 percent between R2,329,301 and R2,994,800, 11 percent between R2,994,801 and R13,310 million and 13 percent thereafter.
MEDICAL EXPENSES
- Taxpayers may, in determining tax payable, deduct monthly contributions to medical schemes (a tax rebate to be known as a medical scheme fees tax credit) up to R364 for each of the taxpayers and the first dependent on the medical scheme and R246 for each additional dependent.
- An individual who is 65 and older, or if that person, their spouse or child is a person with a disability, 33.3% of qualifying medical expenses paid and borne by the individual and an amount by which medical scheme contributions paid by the individual exceed three times the medical scheme fees tax credits for the tax year.
- Any other individual, 25% of an amount equal to qualifying medical expenses paid and borne by the individual and an amount by which medical scheme contributions paid by the amount which exceeds 7.5% of taxable income (excluding retirement fund lump sums and severance benefits).
VAT
The rate increases to 15.5% effective 1 May 2025 and to 16% effective 1 April 2026.
The compulsory VAT registration threshold remains at R1 million turnover per twelve-month period.
FOREIGN EXCHANGE
The offshore investment allowance remains at R10 million per adult person per calendar year.
In addition, the R1 million individual single discretionary allowance remains.
CONTACT
For any tax related advice and consulting contact us on 015 590 1000.