Travel Allowance Tax: How SARS Taxes Your Car Allowance in 2026

Last Updated: September 2026 | Reading Time: 7 minutes

A travel allowance is not free money – SARS treats it as taxable income. With a logbook you only pay tax on the private portion; without one you pay tax on all of it.

South African minibus taxi and cars on a busy N1 highway near Pretoria

Quick Answer

A travel allowance (IRP5 code 3701) is a fixed monthly amount your employer pays for business use of your own car. PAYE is withheld on 80% of it during the year (20% if your employer is satisfied you travel at least 80% for business). On assessment, SARS taxes only your private-use portion – but only if you kept a logbook.

How the Allowance Is Taxed During the Year

Your employer deducts PAYE on 80% of the allowance each month by default. If your employer accepts that at least 80% of your travel is business-related, PAYE may be deducted on only 20% instead. This is just a withholding estimate – the final number is settled on your ITA34 assessment.

How the Final Tax Is Calculated

At year end SARS compares your allowance against the deductible cost of your business travel, calculated in one of three ways:

Actual costs: fuel, maintenance, insurance, licence, finance charges and wear-and-tear, apportioned by business/total kilometres from your logbook.
Prescribed rate per kilometre (updated annually in the SARS Fixing of Rate per Kilometre notice) multiplied by business kilometres – simplest when you have no cost records.
Deemed expenditure tables based on your vehicle’s value, again split by the logbook ratio.

Whichever method you use, the business-kilometre split comes from your SARS-compliant logbook. No logbook, no deduction – the whole allowance becomes taxable.

Worked Example

Scenario: Lerato receives a travel allowance of R7,500 per month (R90,000 per year). Her car cost R320,000. Her logbook shows 22,000 business km out of 32,000 total km (68.75%).

Deemed annual cost for a R320,000 car: about R108,000
Business portion: R108,000 x 68.75% = R74,250
Taxable portion of allowance: R90,000 – R74,250 = R15,750

Without a logbook, the full R90,000 would be taxed – at her 31% marginal rate that is roughly R23,000 more tax. The logbook is the whole game.

Company Car vs Travel Allowance

A company car creates a monthly fringe benefit (code 3801) valued at 3.5% of the car’s determined value (3.25% with a maintenance plan). The same logbook rules apply to reduce the benefit for business use. If your employer pays you a reimbursive allowance at or below the prescribed rate per km for occasional business trips, that portion is tax-free and does not even appear as taxable income.

Sales reps and estate agents who earn mostly commission often qualify under the wider commission-earner rules – see commission earner deductions.

Official Sources

Important: this is not a free service. TaxSeason2026.online is the website of Admin Boss – Tax division, a private South African tax practice that assists individuals with the preparation and filing of their SARS tax returns for a professional fee. We are not SARS and we are not affiliated with SARS or any government body. SARS eFiling itself is a free government channel – our fee covers expert review, deduction optimisation and done-for-you filing.

Frequently Asked Questions

How much of my travel allowance is taxable?

Only the private-use portion is taxable, provided you kept a logbook. SARS compares your allowance to the deductible cost of your business kilometres; the excess of the allowance over that cost is taxed at your marginal rate.

What is the prescribed rate per kilometre for 2026?

SARS publishes the rate per kilometre each year in a Gazette notice – it was R4.84 per km for 2025/26 and is adjusted annually. The rate applies to reimbursive travel claims up to the SARS cap and to the simplified business-cost method.

My employer taxes 80% of my allowance every month. Will I get a refund?

If your logbook shows a high business-use percentage, yes – the over-deducted PAYE comes back as a refund on assessment. If you cannot produce a logbook, the opposite can happen and you may owe SARS.

Need Help?

Admin Boss – Tax division prepares and files personal income tax returns for clients across South Africa – 100% remote, no office visit needed. Contact us for a quote or call 074 918 7130 (Mon-Fri 08:00-16:00).

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