Travel allowance tax in South Africa: how SARS treats it

The fast answer: If you get a travel allowance, SARS includes 80% of it in your remuneration each month so your employer can deduct PAYE (employees' tax) on it. If your employer is satisfied that at least 80% of your driving is for business, only 20% is included instead. You don't get the actual deduction monthly – you claim it when you file your annual return (ITR12), and you must keep a logbook. No logbook, no claim. That's the whole system in two sentences; the rest of this guide explains the reasoning so the number on your assessment makes sense.

How a travel allowance is taxed month-to-month (the 80/20 rule)

A travel allowance is a fixed amount your employer pays you (reflected under code 3701 on your IRP5) to cover business driving in your own vehicle. SARS doesn't wait until you file to tax it – it taxes a portion every payday.

The default rule: 80% of the allowance is included in your remuneration for PAYE. So if your allowance is R6 000 a month, your employer works out employees' tax as if R4 800 of it is taxable salary. The other 20% is held back from monthly tax because SARS assumes a chunk of your driving is genuinely for business.

There's a concession. If your employer is satisfied that at least 80% of your vehicle use will be for business, the inclusion drops to 20% – meaning only R1 200 of that R6 000 is taxed monthly. This is meant for people who are on the road for work almost all the time (a sales rep, for example), not the average commuter.

Two things to keep straight:

The 80/20 split is only a provisional withholding rule. It decides how much tax comes off each month, not your final deduction.
The final figure is settled on assessment, after SARS sees your logbook. You can end up with a refund or owing more, depending on how much you actually drove for business.

The logbook is everything (what to record; no logbook, no claim)

This is the single most important sentence in this guide: without a logbook, SARS will not allow your travel claim. It doesn't matter how much business driving you did – if you can't evidence it, the deduction is zero and you'll have paid full tax on the allowance.

A SARS-acceptable logbook records:

Your opening odometer reading on 1 March (the start of the tax year) and your closing reading on 28 February – this gives your total kilometres for the year.
For each business trip: the date, the business kilometres travelled, and the destination/reason for the trip.

You don't have to log private trips kilometre-by-kilometre. SARS works out private travel as total kilometres minus business kilometres. But you must be able to justify every business kilometre you claim. Keep it contemporaneously (as you go), not reconstructed from memory in July.

Actual costs vs the SARS deemed-cost tables (how the deduction is worked out)

When you file your ITR12, you choose one of two methods to value your claim:

Actual costs. You add up what the vehicle genuinely cost you over the year – fuel, maintenance, repairs, insurance, licence, finance charges and wear-and-tear – and claim the business-use proportion of that total. This needs real records and receipts, but can produce a bigger deduction for an expensive vehicle with high running costs.
The SARS deemed-cost rate tables. Instead of receipts, you apply SARS's prescribed cost rates, which are set according to your vehicle's value. SARS publishes these rate tables for each year of assessment, and the deduction is calculated from them against your business kilometres.

We deliberately don't quote rand-per-kilometre or deemed-cost figures here, because they change every tax year and are set by SARS in the official tables. For the 2026 year of assessment (ending 28 February 2026), our Travel Allowance calculator applies the correct tables for you and shows the working, so you can compare the deemed-cost result against actual costs and use whichever is higher.

A practical note: most people use the deemed-cost method because it's far less paperwork – you still need the logbook for kilometres, but you don't need a shoebox of fuel slips.

Business vs private kilometres (home-to-work is private)

Only the business portion of your travel is deductible. This is where many taxpayers over-claim by accident.

The trap: travel between your home and your normal place of work is private, not business. Your daily commute does not count, no matter how far it is. SARS treats getting to your usual office as your own affair.

Business kilometres are trips you make in the course of your work – visiting clients, travelling between work sites, running to a supplier, driving to a meeting at another office. A trip from your office to a client and back is business. The drive from your house to that same office in the morning is private.

Because your deduction is the business proportion of your costs (or business km against the deemed rate), getting this split right is what determines your refund. Inflating business kilometres is exactly what the logbook exists to prevent.

Travel allowance vs reimbursive travel

These are two different things and they're coded differently on your IRP5 – don't confuse them.

A travel allowance (codes 3701/3702) is a fixed amount paid regularly whether you drive or not. It's subject to the 80/20 PAYE rule above, and you claim your deduction on assessment using a logbook.
A reimbursive travel allowance is paid per kilometre you actually travel for business – you record the business km, and your employer pays you a rate for them. It's a refund of a cost rather than a fixed allowance.

The two are taxed and reported differently, and you can receive both. If you're not sure which one you have, check the source codes on your IRP5: a fixed monthly figure under 3701 is an allowance; a per-km payment tied to trips is reimbursive.

A worked example (show the reasoning)

Thandi earns a R6 000/month travel allowance (R72 000 for the year). Her employer applies the default rule, so 80% (R57 600) is included in her remuneration and PAYE is withheld on it through the year.

She keeps a proper logbook. At year-end it shows:

Opening odometer (1 March): 40 000 km
Closing odometer (28 February): 60 000 km
Total: 20 000 km
Business kilometres: 8 000 km (client visits and inter-site travel – her home-to-office commute is excluded)

So her business use is 8 000 / 20 000 = 40%.

On her ITR12 she uses the deemed-cost method. The calculator takes her vehicle value, pulls the SARS deemed-cost rate for the 2026 tax year, and multiplies it by her 8 000 business kilometres to produce her deduction. That deduction reduces her taxable income.

Because she was taxed monthly on 80% of the allowance but her real business use justified a solid deduction, the assessment recalculates the difference – typically producing a refund. The reasoning is the point: the monthly 80% was a holding position; the logbook turned it into the right number.

Frequently asked questions

Is a travel allowance fully taxable? No. By default 80% is included in your monthly PAYE, or 20% if your employer is satisfied at least 80% of your use is for business. The final taxable amount is settled on assessment after your logbook-based deduction.

Can I claim a travel deduction without a logbook? No. A logbook recording your opening and closing odometer and your business kilometres is compulsory. Without it, SARS disallows the claim entirely.

Does driving from home to work count as business travel? No. Home to your normal place of work is private travel and cannot be claimed. Only trips made in the course of your work are business kilometres.

Should I use actual costs or the SARS deemed-cost tables? You may use either. Most people use the deemed-cost tables because they need far less paperwork. Compare both and claim whichever gives the larger deduction – our calculator does both.

What's the difference between a travel allowance and reimbursive travel? A travel allowance (code 3701/3702) is a fixed amount subject to the 80/20 rule. Reimbursive travel is paid per business kilometre actually driven. They're reported under different IRP5 source codes.

Work out your travel claim

Don't guess at your refund. Plug your allowance, your odometer readings and your business kilometres into our Travel Allowance calculator – it applies the SARS deemed-cost tables for the 2026 year of assessment, compares them against actual costs, and shows you exactly how the deduction is built, kilometre by kilometre. Want the full picture? Run it alongside your medical tax credits and your other deductions in the Comprehensive calculator to see your whole assessment in one place.

SARS sources: