Tax for Builders
Income tax, provisional tax, VAT and deductions, explained without the SARS jargon.
If you work for yourself in the trade, SARS treats you as a provisional taxpayer: you pay income tax on your profit in advance during the year and square up when you file. On top of that sits VAT once you are big enough, and a long list of expenses you are allowed to claim to bring your tax bill down. This hub explains how the income tax brackets and rebates work, how provisional tax (the IRP6) is paid, when you have to register for VAT, and what counts as a deductible expense. The figures here are for the 2026/27 tax year (the SARS year runs 1 March to 28/29 February). Always check the current SARS rates before you file.
Income tax: brackets and rebates
As a sole trader your business profit is taxed in your own hands on the personal income tax tables. For 2026/27 the brackets run: 18 percent up to R245,100, 26 percent to R383,100, 31 percent to R530,200, 36 percent to R695,800, 39 percent to R887,000, 41 percent to R1,878,600, and 45 percent above that. The brackets are marginal, so only the slice of income in each band is taxed at that band's rate. Everyone gets the primary rebate of R17,820 knocked off the tax due, with a secondary rebate of R9,765 if you are 65 to 74 and a tertiary rebate of R3,249 if you are 75 or older. Because of the rebate, you only start paying income tax once your taxable income passes the threshold, which for 2026/27 is R99,000 if you are under 65. If you run through a company instead, the company pays company tax on its profit, and small companies may qualify for the reduced Small Business Corporation rates or the simpler turnover tax regime.
Provisional tax: the IRP6
Most self-employed tradespeople are provisional taxpayers, which means you pay your income tax in two estimates during the year instead of one lump at the end. You submit an IRP6 return and pay: the first by the end of August (six months into the tax year) and the second by the end of February (the last day of the tax year). A third, voluntary top-up payment can be made later to avoid interest if you underpaid. The key with provisional tax is to estimate your taxable income honestly; SARS charges penalties and interest if your estimate is too low, so the safe habit is to set money aside as it comes in and base each estimate on your real numbers. Get the first estimate roughly right and the year stays painless.
VAT: when you have to register
VAT is charged at 15 percent. You must register for VAT (compulsory registration) once your turnover passes R2.3 million in any 12-month period; this threshold rose from R1 million on 1 April 2026, so if you registered under the old figure you do not automatically fall away, you must apply to deregister. You may register voluntarily once your turnover reaches R120,000. Once registered you add 15 percent VAT to your invoices, you can claim back the VAT on your business purchases, and you file VAT returns (usually every two months) and pay over the difference. Registering is not automatically a good thing for a small trade: it adds admin and makes you more expensive to private homeowners who cannot claim the VAT back. Weigh it up, and if you are doing big commercial work where your clients are themselves VAT-registered, it usually makes sense.
What you can claim
You only pay tax on profit, so every legitimate business expense you claim lowers the tax you owe. For a tradesperson that typically means materials and consumables, tools and small equipment, vehicle running costs for business travel, fuel, business insurance, protective clothing and PPE, your phone and data, accounting fees, training and trade registration fees, and a portion of home costs if you run the business from home. Travel is a common one: you can claim business kilometres, and SARS publishes a per-kilometre rate (R4.95/km for 2026/27) as one way to work it out. The golden rule is keep the proof: logbooks for travel, invoices and receipts for everything else, and a clean separation between business and private spending. No record, no claim. If in doubt about whether something qualifies, check before you claim rather than after SARS asks.
Staying on the right side of SARS
Register as a taxpayer, file on time, and keep your records for at least five years. The cheapest way to handle tax is to set aside a percentage of every payment the day it lands, so the provisional tax bill is already covered when it falls due. Keep your business and personal money in separate accounts; it makes the figures honest and the filing quick. If you get a letter or an assessment you do not understand, do not ignore it, deadlines on SARS letters are short and the penalties for missing them add up. If your affairs are getting complicated (a company, VAT, staff), a tax practitioner usually pays for themselves. SARS eFiling is free and most returns can be done online.