Reimbursive Travel Allowance in South Africa: How It Differs From a Fixed Allowance

A reimbursive travel allowance pays you a set amount for each business kilometre you actually drive, rather than a fixed monthly sum. If your employer reimburses you at or below the rate per kilometre that SARS fixes each year, and pays you no other travel allowance for the same vehicle, the reimbursement is not taxed and no PAYE comes off it. Pay above that rate, or add a fixed allowance on top, and part or all of it becomes taxable. The SARS fixed rate is R4.76 per kilometre for the 2026 tax year and R4.95 per kilometre from 1 March 2026.

This is a different mechanism from a fixed travel allowance. A fixed allowance is a set amount paid every month whether you drive 100 or 3,000 business kilometres. A reimbursement tracks your logbook: no business travel in a month means no reimbursement that month.

The three source codes

Your IRP5 tells SARS which kind of travel money you received, and each has its own code.

• Code 3701 is a fixed travel allowance. Your employer includes 80% of it in your remuneration for monthly PAYE, or only 20% if satisfied that at least 80% of your use will be for business. You settle the real position on assessment using a logbook.
• Code 3703 is a non-taxable reimbursement. It applies when the rate is at or below the SARS fixed rate per kilometre and you get no other travel compensation for the vehicle (parking and toll fees do not count against you). No PAYE, and nothing to reconcile on assessment.
• Code 3702 is a taxable reimbursement. It applies whenever the 3703 test fails, for example because the rate is higher than the SARS rate or because a fixed allowance is also paid.

When the reimbursement stays tax free

Two conditions have to hold for code 3703. The rate must not exceed the SARS fixed rate, which is R4.76 per kilometre for the 2026 tax year (1 March 2025 to 28 February 2026) and R4.95 per kilometre from 1 March 2026. And there must be no other travel allowance or further reimbursement for that vehicle. Meet both and the reimbursement is paid to you in full, untaxed, and does not even appear as taxable income on assessment.

If your employer pays more than the SARS rate, the portion up to the rate is reported under code 3702 and is not put through PAYE, while the excess above the rate is added to your remuneration and taxed under code 3722. If you receive a fixed travel allowance as well, the whole reimbursement is reported under code 3702 and taxed regardless of the rate.

A worked example

Thandi drives 4,200 business kilometres over the 2026 tax year and keeps a logbook. Her employer reimburses her and pays no fixed travel allowance.

Reimbursed at the SARS rate of R4.76 per kilometre:

4,200 km x R4.76 = R19,992

Because the rate is not above R4.76 and there is no other allowance, the full R19,992 is code 3703. No PAYE, no tax on assessment.

Now suppose the employer instead pays R5.50 per kilometre:

Total paid = 4,200 km x R5.50 = R23,100 Non-taxable part = 4,200 km x R4.76 = R19,992 Taxable excess = 4,200 km x (R5.50 - R4.76) = 4,200 x R0.74 = R3,108

The R19,992 up to the SARS rate is reported under code 3702 and not put through PAYE. Only the R3,108 excess is added to Thandi's income and taxed at her marginal rate. If she were in the 31% bracket, that is about R963 of tax on a reimbursement of R23,100.

Reimbursement or a fixed allowance

Neither is automatically better. A fixed allowance suits someone with steady, heavy business travel, because the monthly cash is predictable and the logbook claim on assessment can be large. A reimbursement at the SARS rate suits someone whose business driving varies month to month, because a compliant reimbursement is simply tax free and there is nothing to reconcile later. The one rule that never changes is the logbook: without it, a fixed-allowance claim collapses and a reimbursement cannot be substantiated.

If you receive a fixed allowance, you can model the deduction in the travel allowance calculator and read the mechanics in the travel allowance guide. Where the vehicle belongs to the employer rather than you, the rules are different again, as set out in the article on the company car fringe benefit.