Taxation on Retrenchment

A lump sum benefit payable on retrenchment from your Savings Pot is taxed at your marginal tax rate.

A lump sum benefit payable on retrenchment from your Vested Pot is taxed according to the following fixed scale:

R0 – R550 000

0%

R550 001 – R770 000

18% of the amount exceeding R550 000

R770 001- R1 155 000

R39 600 plus 27% of the amount exceeding R770 000

R1 155 001 and above

R143 550 plus 36% of the amount exceeding R1 155 000

Any withdrawal or retrenchment benefit previously received tax-free (including any tax-free amount received from your Employer as a severance package), as well as tax-free portions for amounts paid out after 1 March 2009 in respect of divorces or maintenance orders, will reduce the tax-free portion available.

To calculate how much of your cash benefit will be tax free, use the UCTRF Lump Sum Payment Tax Calculator at https://uctrf.co.za/uctrf/exit-tax-calculator

Please Note:

  • Any transfer value from the AIPF will be tax free.
  • Any contributions to your Vested Pot that were previously taxed will be tax free.




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