UIF vs PAYE: What’s the Difference?
Quick Answer
UIF vs PAYE: What's the Difference?
PAYE is income tax: deducted from the employee’s salary per the SARS tax tables and paid to SARS – the employee’s own tax. UIF is unemployment insurance: 1% deducted from the employee plus 1% paid by the employer, funding benefits if the employee loses their job. Both ride on the monthly EMP201.
What this means in plain language
On the payslip they sit side by side, which is why they get confused. PAYE varies with salary (0% below the threshold, up to 45%); UIF is a fixed 1% + 1% capped at R177.12 each.
They also answer different questions. PAYE settles the employee’s income tax with SARS. UIF buys the employee a safety net from the Unemployment Insurance Fund.
Who this applies to
- Employers setting up payroll deductions for the first time
- Employees reading a payslip and wondering where the money goes
What it costs
| Item | Cost / detail |
|---|---|
| PAYE | 0% – 45% of salary per tax tables (2026/27: tax-free under R99,000/year for under-65s) |
| UIF | 1% employee + 1% employer, on remuneration up to R17,712/month |
Common mistakes to avoid
- Deducting UIF from the employer’s pocket only – 1% is lawfully the employee’s deduction.
- Thinking low earners skip UIF – UIF has no tax-free threshold like PAYE; the 24-hour rule is the only test.
- Paying PAYE but forgetting UIF on the same EMP201 – they are declared together.
A South African example
On a R20,000 salary in 2026/27: PAYE is about R1,697 a month (after the primary rebate), while UIF is R200 + R200 = R400 total. Both are declared on one EMP201, but they fund entirely different things.
Related questions
- What Is PAYE in South Africa?
- How Does UIF Work for Employers in South Africa?
- Hiring Employees in South Africa: The Complete Employer Guide
- UIF and COIDA: The Complete Employer Compliance Guide for South Africa
Always verify this information with official South African government sources. Rules, fees and thresholds change. Check SARS, CIPC, the Department of Employment and Labour or gov.za before you act.
Frequently Asked Questions
Is UIF part of PAYE?
No. They are separate statutory deductions declared together on the EMP201. PAYE is the employee’s income tax; UIF is an insurance contribution split 1% employee and 1% employer.
Do low earners pay PAYE and UIF?
Low earners often pay no PAYE (2026/27 threshold: R99,000 a year for under-65s) but still pay UIF – 1% of their remuneration plus the employer’s 1%, as long as they work 24+ hours a month.
Can I claim UIF if I resign?
Generally no – UIF unemployment benefits cover retrenchment, dismissal and contract expiry, not resignation. Maternity, illness and adoption benefits follow their own rules.
Official sources
About BizAnswers: BizAnswers is a privately owned South African company – not a government department. Our guides are free to read and show you how to do things yourself through official channels. If you would rather have the paperwork handled for you, we assist individuals and businesses with filing their South African tax returns and staying compliant, which is a paid service, not a free government service. Contact us for help.
Last reviewed: September 2026 by the BizAnswers editorial team. How we write and check our guides.
You May Also Like
How Does UIF Work for Employers in South Africa?
What Is COIDA and Do I Need It?
