Payroll Mistake

Incorrect PAYE Deduction: How to Find and Fix It

Deducting the wrong PAYE is one of the most common payroll errors — and one of the easiest to fix quickly, if you catch it early.

Common causes

• Using last year's tax tables after 1 March (rates change every tax year)
• Leaving out taxable allowances or fringe benefits from gross remuneration
• Applying the wrong age rebate (primary, secondary or tertiary)
• Missing a pension/retirement annuity deduction that reduces taxable income
• Not annualising irregular income (bonuses, once-off commission) correctly

How to check if PAYE is wrong

Recalculate the employee's PAYE using our PAYE Calculator or the method in our How to Calculate PAYE guide, using the correct tax year's tables and the employee's actual gross remuneration for the period.

Fixing an under-deduction

1. Correct the calculation going forward immediately
2. Recover the shortfall from the employee over a reasonable period — communicate clearly and get agreement where possible, since large lump-sum deductions can breach the BCEA's rules on deductions
3. Correct the affected EMP201 return(s) if already submitted

Fixing an over-deduction

1. Refund the employee the difference in the next payroll run
2. Correct the calculation going forward
3. The over-payment to SARS is usually reconciled automatically at EMP501 — no separate refund claim is normally needed mid-year

Why it matters at year-end

Unresolved PAYE errors surface at EMP501 reconciliation, when total PAYE paid is compared to what IRP5 certificates say was deducted. A mismatch here can trigger a SARS query — catching errors monthly avoids a stressful correction at year-end.

People Also Ask

What happens if I under-deduct PAYE for months?

You'll need to recover the shortfall from the employee going forward and correct affected EMP201 submissions — the longer it's left, the bigger the correction at EMP501.

Can I just deduct the full shortfall from one payslip?

Large lump-sum deductions can breach the BCEA's rules on permissible deductions — recover shortfalls over a reasonable period with clear communication.

Does an over-deduction need to be refunded immediately?

Best practice is to refund it in the next payroll run once identified.

Related Resources

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