The Repo Rate Went Up on 23 September. Your October Payroll Already Felt It

Key takeaways

• On 23 September 2026 the South African Reserve Bank raised the repo rate by 25 basis points to 7.25%, its second hike this year after May. Prime is now 10.75%.
• SARS's official rate of interest rose from 8.00% to 8.25% on 1 October 2026. It is used to tax employees on interest-free or low-interest loans from their employer, and October payroll should already use the new rate.
• SARS currently charges 10.50% a year on outstanding tax and pays 6.50% on overpaid provisional tax. These rates follow the repo with a lag; the May hike only reached them on 1 September 2026.
• A late VAT or PAYE payment costs a 10% penalty plus interest. Paying SARS late is not a cheaper form of credit than an overdraft at prime.
• The next Monetary Policy Committee decision is on 19 November 2026. The Reserve Bank expects inflation above 5% later this year, so budget as if rates stay where they are or go higher.

What happened on 23 September

The Reserve Bank's Monetary Policy Committee voted unanimously to raise the repo rate from 7.00% to 7.25%, effective 25 September 2026 (SAnews). Prime moved from 10.50% to 10.75% (STBB).

The reason was fuel. Headline inflation was 4.4% in August, but the committee expects it to go above 5% later this year and early next year before it slows, and only expects it back at the 3% target towards the end of 2027 (SARB). Governor Lesetja Kganyago said that a few months ago the fuel-price shock seemed to be unwinding, "but now it has intensified." The Bank also cut its growth forecast to 1.2% for the year after the economy contracted by 0.2% in the second quarter.

This comes after a long run of cuts. Between September 2024 and November 2025 the repo came down six times to 6.75%. It was held in January and March, raised to 7.00% in May, held in July, and now raised again (SA Calc). Anyone who planned 2026 on the assumption that rates would keep falling now has the reverse.

Most coverage stopped at what this does to a home loan instalment. For an SME, three other rates move with the repo, and each affects either payroll or your SARS account.

The SARS rate that changed on 1 October: employee loans

Many small businesses lend money to staff: an advance against salary that is paid back over six months, help with a deposit, a loan to fix a car. When the employer charges less interest than SARS's "official rate", the gap is a taxable fringe benefit under the Seventh Schedule to the Income Tax Act, and PAYE has to be withheld on it through payroll.

The official rate is the repo rate plus one percentage point. It changes from the first day of the month after a new repo rate comes into operation (SARS). SARS updated its table on 30 September:

• 1 December 2025 to 31 May 2026: 7.75%
• 1 June 2026 to 30 September 2026: 8.00%
• From 1 October 2026: 8.25%

The benefit is the interest the employee would have paid at the official rate, less the interest they actually pay (SARS). Here is how that works on an interest-free loan of R50,000:

• At 8.00%, the taxable benefit was about R333 a month.
• At 8.25%, it is about R344 a month.

The difference is small per employee. The bigger risk is the employer who never set the benefit up in payroll at all, or set it up once at a fixed rate and has not touched it since. Since December 2025 the official rate has moved twice, and SARS sees the outcome on the IRP5 at reconciliation.

Some loans are excluded (SARS):

• Casual loans of R3,000 or less, granted at irregular intervals.
• Loans that help the employee pay for their own studies.
• Housing loans of R450,000 or less, where the property is worth no more than R650,000, the employee's remuneration proxy is no more than R360,000 and the employee is not a connected person.

If you have staff loans that don't fall under these exclusions, check October's payroll before you file the EMP201, which is due by Wednesday, 7 October (SARS).

The SARS rates that haven't changed yet, but will

The interest SARS charges on outstanding tax and pays on certain refunds does not follow the repo directly. It is linked to the rate set under section 80(1)(b) of the Public Finance Management Act. For tax purposes, a change only applies "from the first day of the second month following the date on which the PFMA rate comes into operation" (SARS).

So there is a delay. The May repo hike only reached SARS's rates on 1 September 2026. That is when interest on outstanding tax went from 10.25% to 10.50% (SARS), and interest on overpaid provisional tax went from 6.25% to 6.50% (SARS). SARS has not yet published new rates following the September hike. If the pattern repeats, expect both to go up by another quarter point in a few months.

Two things follow:

• Paying SARS late is not cheap credit. At 10.50%, SARS interest is roughly the same as prime at 10.75%. On top of that, a late payment of VAT, PAYE or provisional tax triggers a percentage-based penalty under section 213 of the Tax Administration Act, normally 10% of the unpaid amount (De Rebus, SARS). Pay R80,000 of VAT a month late and you owe a R8,000 penalty plus about R700 in interest. That is about 11% for one month, compared with less than 1% for a month on an overdraft at prime.
• Paying SARS too much earns very little. If you overpay provisional tax, SARS pays you 6.50%, four percentage points below what it charges you when you underpay. A sensible estimate is better than a generous one.

Where the hike reaches your cash flow

Rate decisions reach a small business slowly and from several directions. These are the places to look this month:

• Overdrafts and facilities priced off prime. These went up on 25 September. Check your next bank statement against the new rate.
• Customers who pay late. Your customers are paying more on their own borrowing too, and supplier invoices are often the first thing they delay. Debtor days usually go up a month or two after a hike, not straight away.
• VAT timing. If your VAT period ended in September, the return and payment are due on the 25th if you pay manually. Because 25 October is a Sunday, that moves to Friday, 23 October. If you file and pay on eFiling, the deadline is the last business day of the month, Friday, 30 October (SARS). Plan the cash for one of those two dates; don't just hope it will be there.
• Provisional tax for companies. A company's second provisional payment is due on the last day of its year of assessment (SARS). If your year ends in October, November or December, make that estimate from up-to-date management accounts, not from last year's figure. The underestimation penalty under paragraph 20 of the Fourth Schedule is 20%.

Individuals with a February year-end had until 30 September for their voluntary third, or top-up, payment for the 2026 year. That date has now passed.

What to do before the end of October

October is already busy. The interim EMP501 window, which covers March to August, closes on 31 October (SARS), and the filing deadline for non-provisional individual taxpayers is 23 October (SAnews). We covered both in September's employer windows. The rate changes add a few items to the list:

• List every staff loan. Write down the balance, the interest rate charged (if any), and whether one of the exclusions applies.
• Update the fringe benefit to 8.25% for October. Do it before the EMP201 goes in on 7 October. If the benefit was never set up, deal with it now, before reconciliation, not after.
• Check that the benefit ties to the interim EMP501. Any loan running since March should already show a fringe benefit for the months up to August. Fix any gap before 31 October.
• Diarise VAT and PAYE payments for 7, 23 and 30 October, whichever apply to you, and keep the cash for them separate from operating cash.
• Rerun your provisional tax estimate if your company's year-end is in the next three months.
• Look at your debtors list. Send reminders now, while invoices are 30 days old, not 90. Our cash flow guide covers the rest.

Why we build it this way

Most of this is about timing: knowing what you owe SARS and when, and knowing what your customers owe you before you need the money. Bluubin's accounting side brings VAT201 reporting, bank statement upload and reconciliation, and recurring invoices with automatic payment reminders into one place, so the VAT number and the debtors list come from the same books. The P&L and balance sheet reports give you current figures for a provisional tax estimate.

On the payroll side, Bluubin runs bulk payroll and integrates with e@syFile, so the EMP201 figures, the IRP5s and the EMP501 reconciliation all come from the same payroll data. When a rate changes in the middle of the year, you want to correct it once, in one place, and have it carry through to the reconciliation.

There is a thirty-day trial with full access and no credit card if you want to run it against your own numbers.

If you take two things from this article, make them these: update any staff loan fringe benefit to 8.25% before you file the EMP201 on 7 October, and treat SARS deadlines as fixed costs in your cash flow, because a 10% penalty costs more than any overdraft.

This guide is general information to help you get oriented — it isn't formal tax or legal advice. Thresholds, rates and deadlines change, so confirm the current figures on the SARS website or with your accountant before you act.