South Africa Official Rate of Interest Increase: 8.25% Effective 1 October 2026

The South African Reserve Bank has adjusted the repo rate under its monetary policy framework, increasing it from 7.00% to 7.25% effective 25 September 2026. As a result, the official rate of interest, as defined in section 1 of the Income Tax Act, has increased from 8.00% to 8.25%, effective 1 October 2026.

Official Rate of Interest Change

• The South African Reserve Bank increased the repo rate from 7.00% to 7.25%, effective 25 September 2026.
• The official rate of interest is calculated as the repo rate plus 100 basis points (1%). When a new repo rate is determined, the new official rate applies from the first day of the month following the date on which the new rate came into operation.
• Following the repo rate change on 25 September 2026, the official rate of interest increased from 8.00% to 8.25%, effective 1 October 2026.

Important: How the Official Rate is Calculated

The official rate of interest is always 100 basis points (1%) above the repo rate. When the repo rate changes, the new official rate applies from the first day of the month following the change, not from the date of the change itself. This timing distinction is important for accurate fringe benefit calculations.

Impact on Taxable Fringe Benefits for Low-Interest and Interest-Free Loans

Under paragraphs 2(f) and 11 of the Seventh Schedule to the Income Tax Act, where an employee owes money to an employer at a rate below the official rate of interest, the difference between the rate charged by the employer (if any) and the official rate of interest constitutes a taxable fringe benefit.

The increased official rate of 8.25% applies to the calculation of this fringe benefit from 1 October 2026. Employers providing interest-free or below-market-rate loans to employees must recalculate the taxable fringe benefit using the new rate.

What Employers Need to Know

The rate increase of 0.25% will affect the taxable value of fringe benefits on any employee loans that are interest-free or carry interest below 8.25%. The higher the difference between the official rate and the rate charged on the employee loan, the larger the taxable fringe benefit that must be included in the employee's income.

Employers should review their employee loan arrangements and recalculate taxable fringe benefits for any affected employees, ensuring these amounts are properly reflected in payroll from 1 October 2026 onwards.

Official Resources and Release Notes

• Access the official South African Reserve Bank publication.
• Access the current South African Reserve Bank market rates.
• Refer to release note CM-19489, titled Calculation changes / Increase in official interest rate - October 2026, for more information.