South Africa Retirement and Withdrawal Lump Sum Tax Calculator
Estimate SARS tax on a current retirement, severance or pre-retirement withdrawal benefit for the 2027 tax year by applying the cumulative lump-sum method.
Enter the current and prior lump sums
The selected benefit type and complete prior history are essential; the SARS directive is authoritative.
Choose the correct table
South Africa uses different tables for a withdrawal benefit before retirement and for retirement fund lump sums or qualifying severance benefits. A resignation cash withdrawal generally belongs to the withdrawal table. Retirement, death and specified qualifying termination events can fall under the retirement table. The payer and legal reason for the benefit matter; selecting the table that gives the lower result does not make it applicable.
A savings-component withdrawal under the two-pot system is generally taxed differently at a marginal rate and is not the calculation on this calculator. Transfers between approved funds, annuitisation and portions that cannot be taken in cash also require separate treatment. Read the fund’s benefit quotation and directive category before entering the gross cash lump sum.
The 2027 withdrawal table
For the year from 1 March 2026 to 28 February 2027, the withdrawal table taxes the first R27,500 at zero. The next band through R726,000 is 18% above R27,500. From R726,001 through R1,089,000, tax is R125,730 plus 27% above R726,000. Above R1,089,000 it is R223,740 plus 36% of the excess.
These brackets apply to the cumulative calculation, not as a fresh exemption for every job change. Cashing out retirement savings can also reduce future retirement capital and future access to lower bands. Tax is only one consequence; lost investment growth, fees and preservation options deserve a side-by-side comparison.
The retirement and severance table
The retirement or qualifying severance table starts with a zero band through R550,000. The next band through R770,000 is 18%; the band through R1,155,000 is R39,600 plus 27% above R770,000; and higher amounts are R143,550 plus 36% above R1,155,000. The published table is unchanged for the 2027 year.
The R550,000 band is often described loosely as a tax-free amount, but prior relevant lump sums can already have used it. A severance payment also needs to meet the tax-law conditions. Ordinary salary, notice pay and leave pay are not converted into a severance benefit merely by being included in the same termination package.
Why prior benefits must be entered
SARS determines tax on the current amount by applying the table to an aggregate that includes specified earlier benefits, then subtracting the tax calculated on the earlier aggregate. Relevant history reaches back to retirement fund lump sums from October 2007, withdrawal benefits from March 2009 and severance benefits from March 2011, as described by SARS.
The prior field should therefore not be limited to the previous employer or the same fund. Missing an earlier cash-out can make an estimate dramatically too low. Old directive documents, fund statements and SARS records help establish the correct aggregate. If you cannot confirm it, treat a zero entry as an optimistic scenario, not a fact.
How the calculator applies marginal tax
The script calculates tax on prior plus current, calculates tax on prior alone using the selected table, and reports the difference. This method prevents earlier benefits from being taxed again while recognising that they affect which bands the current benefit occupies. The effective rate divides that difference by the current gross amount.
An effective rate is not the top bracket rate. A current benefit can cross several bands, so portions are taxed at different percentages. Conversely, a modest current amount can face tax immediately if earlier benefits have consumed the zero band. Inspect the aggregate and tax amount together rather than multiplying the whole benefit by one headline percentage.
Worked withdrawal example
With a R300,000 withdrawal and no prior aggregate, R27,500 falls in the zero band and R272,500 is taxed at 18%, giving R49,050. If the same amount follows R500,000 of prior relevant benefits, the aggregate reaches R800,000. The difference calculation then places part of the current amount into the 27% band, increasing current directive tax.
Changing the table to retirement creates a different result because the zero band is much larger. That comparison is educational only. Eligibility follows the event and directive rules, so it cannot be chosen as a tax-planning toggle after the benefit has already been classified.
Directive and final assessment
A retirement fund administrator or employer must request the appropriate SARS directive before paying a covered lump sum. The directive instructs the payer how much employees’ tax to withhold. This calculator cannot issue, reproduce or override that document. Identity data, prior benefits, source codes and event details used by SARS are not available to the script.
The directive withholding and final income-tax assessment are related but not interchangeable in every situation. Other income, deductions and specific benefit types can matter. Retain the directive, IRP5 or IT3 certificate, fund statement and payment advice. Query a difference before spending an expected net amount.
Preservation and advice
A withdrawal decision should include the value of preserving capital. Money left invested can continue compounding for retirement, while a cash withdrawal can permanently reduce the eventual pension or annuity purchase. Compare the after-tax cash with a projection of preserved value using reasonable fees and returns, not only with the gross fund balance.
Consider regulated financial advice when the amount is material, and tax advice where earlier benefits, divorce orders, emigration, retrenchment or multiple funds complicate classification. A calculator can make the table transparent, but it cannot decide whether taking cash is affordable or appropriate for a household’s retirement plan.
Input checklist
Confirm the accrual date, gross cash benefit, event type, fund or employer paying it, prior relevant lump sums, intended transfers and whether any portion is a savings-component withdrawal. Use the 2027 table only for 1 March 2026 through 28 February 2027. A different accrual year may require a different published table.
Run a sensitivity scenario if the prior aggregate is uncertain, but label it clearly. Do not enter the current benefit again inside the prior field. When comparing with a quote, match gross amount and directive category first; a small difference from rounding is less important than a wrong table or missing historical benefit.
Questions that affect this result
Is every resignation withdrawal taxed under the retirement table?
No. A cash withdrawal before retirement generally uses the withdrawal table, subject to the actual fund event and SARS directive classification.
Do I receive a new R550,000 zero band from each fund?
No. Relevant retirement, withdrawal and severance benefits are aggregated across the SARS cumulative periods.
Does this calculate two-pot savings withdrawal tax?
No. Savings-component withdrawals are generally taxed at the individual’s marginal rate and require a different calculation.
Why can a small current benefit have tax?
Prior relevant benefits may already have consumed the zero or lower bands, placing the current amount into a higher cumulative band.
Is the estimate the amount the fund must withhold?
No. The fund or employer follows the binding SARS directive.