Every levy-paying employer funds skills development at 1% of payroll. Where the Skills Development Levy goes, how the mandatory grant returns part of it, what the 30 April deadline requires, and where discretionary grants fit.
The **Skills Development Levy (SDL)** is the one payroll amount an employer pays with nothing visible in return. PAYE is the employee's tax. UIF insures the employee. SDL leaves the business at 1% of payroll every month and appears to vanish into the system. It does not vanish. The levy funds the SETAs and the National Skills Fund, and a levy-paying employer that submits two documents by 30 April each year can recover a fixed share of it as a **mandatory grant**. The larger share is awarded through competitive **discretionary grants**. This guide explains where the levy goes, what each grant requires, and what a typical employer can expect back. It is general information, not tax advice. > **Key facts (as at 5 October 2026)** > - SDL rate: **1%** of the remuneration an employer pays, including overtime, leave pay, bonuses and commission. The employer carries it in full; nothing is deducted from employees (SARS). > - Exemption: employers whose total remuneration is not expected to exceed **R500,000** over the next 12 months do not pay SDL (SARS). > - Where it goes: **20%** to the National Skills Fund and **80%** to the SETAs (Skills Development Levies Act 9 of 1999, section 8). > - Mandatory grant: **20%** of the levy paid, for a Workplace Skills Plan and Annual Training Report submitted by **30 April** each year (SETA Grant Regulations, *Government Gazette* 35940, 3 December 2012, as the SETAs apply them). > - Discretionary grants: **49.5%** of the levy, awarded through each SETA's funding windows (the same Regulations). This guide covers: - Where each rand of the levy goes - The mandatory grant: what it returns and what it requires - A worked example for a R6 million payroll - Mandatory and discretionary grants compared - The administration that keeps the grant claimable - Answers to the questions employers search for ## Where Each Rand of the Levy Goes SARS collects the levy on the monthly **EMP201** return, together with PAYE and UIF, and pays it over under the Skills Development Levies Act. One fifth goes to the National Skills Fund, which finances national priorities. Four fifths go to the SETA with which the employer is registered, based on its main business activity. The SETA then splits its share under the Grant Regulations. | Share of the levy | Goes to | Purpose | |---|---|---| | 20% | National Skills Fund | National skills priorities, funded centrally | | 10.5% | The SETA | Administration (this share includes 0.5% for the QCTO) | | 20% | Levy-paying employers | **Mandatory grants**, paid back to employers that submit a WSP and ATR on time | | 49.5% | Projects the SETA selects | **Discretionary grants**, awarded through funding windows | Two points follow from the table. First, an employer that never submits a Workplace Skills Plan forfeits the mandatory grant, and that money stays with the SETA to be awarded as discretionary funding to someone else. Second, the discretionary pool is more than twice the size of the mandatory one, which is why the grant windows matter to any employer planning learnerships or skills programmes. ## The Mandatory Grant: What It Returns and What It Requires The mandatory grant returns **20% of the levy an employer paid** in the levy year, paid by the SETA in instalments after the submission is approved. It is not competitive. Every levy-paying employer that meets the conditions receives it. The conditions are administrative, which is where most of the unclaimed grant is lost: - The employer is **registered for SDL with SARS** and with the correct SETA, and its levy payments are up to date. - A **Workplace Skills Plan (WSP)**, setting out the training planned for the year ahead, and an **Annual Training Report (ATR)**, reporting the training actually delivered in the year just ended, are both submitted **by 30 April** in the SETA's electronic format. A late submission is normally not accepted, and the grant for that year is lost. - Employers with **50 or more employees** must show that the plan was consulted with employees. In practice that means the WSP is signed off by a recognised trade union or an employee representative, or evidence of consultation is attached. - The employer usually appoints a **Skills Development Facilitator (SDF)**, an internal person or an external provider, to prepare and submit the documents and liaise with the SETA. > The mandatory grant is the only part of the levy that comes back as of right. It is lost most often by missing a date, not by failing a test. Newly registered employers should check the SETA's rule for a first submission, because the deadline for the first year can differ from 30 April. ## A Worked Example An employer with 30 staff and an annual payroll of **R6,000,000** pays SDL at 1%, which is **R60,000** a year, declared as **R5,000** a month on the EMP201 with PAYE and UIF. | Item | Amount | |---|---| | Annual remuneration | R6,000,000 | | SDL at 1% | R60,000 a year (R5,000 a month) | | Mandatory grant at 20%, if the WSP an...