Every February the whole country pretends to care about the Budget speech, and then most small-business owners get on with their day. Fair enough — most of a Budget is macro noise that never touches your bank account. But this year there's one change that genuinely matters if your turnover is growing, and a handful of reliefs that a lot of owners still leave on the table. Here's the plain-English version: what changed, what didn't, and what to actually do about it.
The big one: the VAT threshold jumps to R2.3 million
From 1 April 2026, you're only compulsorily required to register for VAT once your taxable supplies pass R2.3 million in any rolling 12-month period. That's a big move up from the R1 million line that had been sitting untouched for years.
Why does this matter so much? Because that old R1m line arrived early for a lot of businesses. You'd cross it, register, and overnight your prices effectively rose 15% to your customers — or your margin took the hit if you absorbed it to stay competitive. If you sell to the public (a café, a salon, a retailer), that 15% is a real disadvantage against the unregistered shop down the road. The higher threshold buys growing businesses a lot more headroom before that switch flips.
Two things haven't changed. You can still register voluntarily from R120,000 of taxable supplies — which is often the smart move if you sell mainly to other VAT-registered businesses or you're carrying a lot of input VAT on stock and equipment. And once you're in the system, VAT201 returns are still every two months, due by the 25th, and every claim still needs a valid tax invoice behind it.
The threshold is measured on a rolling 12-month basis, not your financial year. If any consecutive 12 months tips over R2.3m — even if it straddles two year-ends — the clock starts and you have 21 business days to register. Watch it monthly. Don't wait for year-end to discover you were three months late.
What the new threshold means for you
- Under R2.3m and growing: you've got breathing room. You don't have to register just because you're doing well. But run the numbers — voluntary registration can still pay if most of your customers claim the VAT back anyway.
- Already registered: nothing changes. You stay in the system. Deregistering is possible if you're now well below the line, but talk to us first — it's rarely the clean win it looks like, and SARS can claw back input VAT on assets you still hold.
- Approaching the line: plan the transition now. Sort your pricing, your invoicing software, and your input-VAT records before you cross it, not in a panic after.
The voluntary registration question — a worked example
The instinct is to stay unregistered as long as possible. Sometimes that's exactly wrong. The question is always: who are your customers, and can they claim the VAT back?
An IT contractor at R900,000, all B2B
You bill R900,000 a year, entirely to VAT-registered companies. Register voluntarily and you charge them R135,000 in output VAT — but they claim every rand of it back, so your price to them doesn't really change. Meanwhile you now reclaim input VAT on your laptop, software subscriptions, phone and car running costs — say R28,000 a year — that you were previously eating. Net result: you're roughly R28,000 better off, and you look like a bigger, more established operation. For a B2B business, voluntary registration is often a quiet win, not a burden.
Flip the customer base to the public — a coffee shop — and the maths inverts: your customers can't claim anything, so the 15% is pure price disadvantage. Same threshold, opposite decision. This is exactly the sort of thing worth ten minutes with an accountant rather than a guess.
The relief owners keep missing: Small Business Corporation rates
Company tax stays at a flat 27%. But if your company qualifies as a Small Business Corporation (broadly, turnover under R20m plus a few ownership and income tests), you don't pay 27% on your first slice of profit — you pay a graduated rate that starts at 0%. For the 2026 tax year the SBC bands are 0% up to R95,750, then 7%, then 21%, then 27% only on profit above R550,000. SARS adjusts these annually, so check the current figures, but the structure is a genuine gift a lot of owners never claim because nobody told them to elect it.
A consultancy making R400,000 profit
At the flat 27% rate, tax on R400,000 is R108,000. As a qualifying SBC, the first R95,750 is taxed at 0%, the next slice at 7%, and only the portion above R365,000 at 21% — landing at roughly R26,200. That's about R81,800 less tax on the same profit, for the same business, purely because it's structured and elected correctly. This is why 'am I an SBC?' is worth asking out loud.
Even simpler: turnover tax for the very small
If your business turns over R1 million or less, there's an elective turnover tax system that replaces income tax, provisional tax and (in most cases) the admin headache with a single small percentage of turnover, on a 0/1/2/3% sliding scale. It's not right for everyone — it taxes turnover, not profit, so a low-margin business can end up worse off — but for a lean, profitable micro-business it can slash both the tax and the paperwork. Worth modelling before you dismiss it.
The rest of the Budget, briefly
Company tax is unchanged at 27%. Dividends tax stays at 20% — relevant the moment you take profit out of a Pty Ltd rather than leaving it in. Provisional tax runs on the same two big deadlines, end of August and end of February, with the same 20% under-estimation penalty waiting for anyone who lowballs their second payment. None of these are dramatic on their own, but together they're the difference between an efficient structure and an expensive one. Treat every rate here as a 2026 figure — SARS moves the brackets each year.
So what should you actually do?
If you're nowhere near R2.3m, the honest answer is: not much — enjoy the headroom. If you're growing fast, sitting near a threshold, taking money out as dividends, or you've never checked whether you qualify for the SBC rates, that's where a short conversation pays for itself many times over. We'll look at your actual numbers rather than the speech-day headlines and tell you straight whether anything in this Budget changes your plan. Book a discovery call and we'll do exactly that.