VAT for Tradespeople

You must register for VAT once your taxable turnover passes R2.3 million in any 12-month period. That threshold applies from 1 April 2026 (up from R1 million, the first increase in 17 years), per SARS's VAT pages and FAQ. Voluntary registration opens at R120,000. The rate is 15%: the increases planned for 2025 and 2026 were both reversed, so 15% it stays.‍‌‌​​​​​​‌​​​​​‌​‌​‌‌‌‌​‌​​‌​‌​‌​‍

The registration thresholds

• Compulsory: taxable supplies above R2.3 million in a 12-month period (from 1 April 2026)
• Voluntary: taxable supplies above R120,000 a year (from 1 April 2026)

The test is gross turnover from VAT-able activities, not profit. Once you cross the line, you must register within 21 business days of the end of that month. One catch from SARS's FAQ: tradies who registered under the old R1 million threshold and now sit below R2.3 million do not fall out automatically. Staying registered or applying to deregister is a choice, and deregistering has consequences worth talking through with your accountant.

Output and input VAT, in plain terms

• Output VAT is the 15% you add to every invoice. You collect it on SARS's behalf; it was never your money.
• Input VAT is the 15% your suppliers charge you on materials, subbies and business costs. You claim it back.
• You pay SARS the difference: output minus input.

Example: you invoice a job at R100,000 plus VAT, so output VAT is R15,000. You bought R30,000 of materials, VAT inclusive, so the input claim is R3,913 (15/115 of R30,000). You owe SARS R11,087 for that job. If you quote VAT-inclusive prices, the VAT inside a R100,000 total is R13,043 (15/115), so always state in the quote whether your price includes VAT.

What a tax invoice must show

Per SARS's tax invoices guidance under section 20 of the VAT Act, a full tax invoice (supplies over R5,000) needs:

• The words "Tax Invoice", "VAT Invoice" or "Invoice"
• Your name, address and VAT registration number
• The client's name, address and VAT number if they are a vendor
• A unique serial number and the date
• A proper description of the goods or services
• Quantity or volume
• The value, the VAT amount and the total (all three shown)

For supplies from R50 up to R5,000 an abridged tax invoice is enough: no buyer details required. Under R50 no tax invoice is needed, but keep the slip. Invoices must be issued within 21 days of the supply. The R5,000 line comes from SARS's published guidance; if a big claim hangs on it, confirm the current threshold notice on SARS's tax invoice pages.

VAT on deposits, progress payments and retention

VAT is triggered on the earlier of receiving payment or issuing the invoice:

• Deposits: output VAT arises when the deposit lands, not when the job finishes.
• Progress payments: VAT is due on each stage claim as it is invoiced or paid.
• Retention: the retained slice only triggers VAT when it is released and invoiced.

South Africa has no domestic reverse-charge mechanism for construction (as of June 2026): the contractor issuing the invoice carries the output VAT. If cross-border subcontracting is involved, get professional advice.

Filing categories

SARS assigns a category: most small vendors file every two months (Category A or B, on alternating cycles), monthly applies above R30 million turnover (Category C), and there are special six-monthly and annual categories for farming and small refund-pattern vendors. Returns and payment are due on the last business day of the month after the period, on eFiling.

Common mistakes

• Spending the VAT. It is SARS's money passing through your account. Park it separately.
• Claiming input VAT without valid tax invoices. SARS verifies refunds hard; a missing VAT number on a supplier invoice kills the claim (see SARS Verification and Audit).
• Missing the 21-business-day registration window after crossing R2.3 million.
• Quoting without saying whether VAT is included. On a R500,000 job that ambiguity is a R65,000 argument.

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