2026/2027 Budget Update: Stability, Strategy, and New Opportunities for Our Clients
At Meyer Rens, we’ve spent the last few days diving into the details of the 2026/2027 Budget. The message from Treasury this year is clear: Stability over drama. With economic growth forecast at 1.6% and inflation expected at 3.4%, the government is focused on narrowing the deficit and stabilizing national debt. For you, the most significant news isn’t what changed, but what didn’t. Treasury avoided major tax rate hikes—keeping VAT at 15%, Corporate Tax at 27%, and Trust Tax at 45%.
However, beneath the surface of this “stabilization budget” lie several threshold adjustments that create genuine strategic opportunities. Here is our breakdown of what these changes mean for your pocket and your business.
What This Means for You: Key Individual Changes
While tax rates remained static, several long-awaited adjustments to brackets and exemptions will impact your financial planning this year.
1.Relief from “Bracket Creep”
After two years without adjustments, personal income tax brackets have finally been adjusted for inflation. As we often explain to our clients, this isn’t a “tax cut” in the traditional sense, but it prevents bracket creep—where inflation-related salary increases push you into a higher tax bracket without an actual increase in your purchasing power. It’s a silent tax increase that has finally been paused.
2.Real Estate: Primary Residence Exclusion
Selling your home? The Capital Gains Tax (CGT) exclusion on the sale of a primary residence has increased from R2 million to R3 million. For those with higher-value homes, this significantly reduces potential CGT exposure upon sale.
3.Enhancing Your Savings
Treasury has expanded the “buckets” for tax-efficient saving:
- Retirement Contributions: The maximum annual deduction has increased to R430,000.
- Tax-Free Savings: The annual limit is up from R36,000 to R46,000 (the lifetime cap remains R500,000).
- Medical Tax Credits: A modest increase to R376 for the main member and R254 for dependants.
Meyer Rens Insights: Trust and Wealth Planning
The most consequential “hidden” gem in this budget is the increase in the annual donations tax exemption, which rises from R100,000 to R150,000.
This has a massive impact on Section 7C loans to trusts. When you make an interest-free loan to a trust, the foregone interest is treated as a “deemed donation.”
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Metric
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Previous (R100k Exemption)
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New (R150k Exemption)
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This 50% increase in structuring capacity is a significant win for families using trusts for estate planning or asset protection. Note: Treasury is currently reviewing the unlimited exemption for donations between spouses. While no changes were made this year, we are watching this space closely for our clients.
Big Wins for Small Business Owners
We are particularly pleased to see practical relief for our entrepreneurial clients, specifically regarding exit strategies and administrative burdens.
Expanded CGT Relief
If you are planning to sell your business, the lifetime CGT exemption has jumped from R1.8 million to R2.7 million. Additionally, the market value threshold for qualifying assets has increased from R10 million to R15 million. This relief is targeted toward active owners over 55 (or those exiting due to ill health), making early exit planning more rewarding than ever.
VAT Threshold Material Change
In a major move to reduce red tape, the compulsory VAT registration threshold has more than doubled:
- Compulsory: Increased from R1 million to R2.3 million.
- Voluntary: Increased from R50,000 to R120,000.
This allows smaller businesses to avoid the administrative heavy lifting of VAT compliance unless they truly reach a significant scale.
The Cost of Living: Sin Taxes & Levies
As expected, “sin taxes” and fuel levies continue to climb. You’ll feel these at the pump and the checkout counter:
- Fuel: General fuel levy (+9c/l), RAF levy (+7c/l), and Carbon levy (+5-6c/l).
- Alcohol: Spirits are up by R3.20 per bottle; wine by 15c; beer/cider by 8c.
- Tobacco: Cigarettes increased by 77c per pack; cigars by R4.56.
The Meyer Rens Perspective
This is a disciplined, steady Budget. While there are no dramatic reforms, the threshold increases genuinely favour taxpayers, particularly around donations, small business exits, and primary residences.
However, the direction from SARS is clear: Compliance and cash flow collection are the priorities. With tightened provisional tax penalty rules and a proposal for interest remission on voluntary disclosures, the emphasis is firmly on accurate and timely reporting.
Our Practical Recommendations:
- Business Exit Strategies: These should be reviewed immediately to align with the new R2.7 million relief.
- Trust Structures: We should reassess your Section 7C capacity in light of the expanded exemption.
- VAT Review: If your turnover is near the new R2.3 million mark, let’s discuss whether deregistration or remaining registered is the better commercial move for you.
- Provisional Tax: This must be managed with precision to avoid the new, tighter penalty rules.
Stability creates opportunity—but only if you have a plan to capture it.
For personalized advice on how these changes affect your tax position, consult Meyer Rens Accountants—your trusted SARS-registered tax practitioners in South Africa.