Thabo runs a busy videography business from his Johannesburg studio. December was his best month ever, with corporate year-end functions, three weddings and a music video. Then, in the last week of February, an eFiling reminder lands in his inbox: his second provisional tax payment is due in four days. He has no idea what his full-year income is, and most of December's profit has already been spent.

If you are a sole proprietor, freelancer or company owner, this scenario is closer than you think. The second provisional tax payment for the 2027 tax year is due at the end of February 2027, and getting it wrong is expensive. Here is how to prepare properly, starting now.

What Is the Second Provisional Tax Payment?

Provisional tax is not a separate tax. It is a way of paying your income tax in advance, in instalments, when your income does not have PAYE deducted from it. SARS treats you as a provisional taxpayer if you:

• run a business as a sole proprietor, freelancer or contractor;

• own a company (every PTY Ltd is automatically a provisional taxpayer); or

• earn more than R30 000 a year in taxable interest, dividends or rental income.

For individuals and companies with a February year-end, there are two compulsory payments each tax year. The first was due by 31 August 2026. The second must be paid by the last day of the tax year. Because 28 February 2027 falls on a Sunday, your IRP6 return (the provisional tax return filed on SARS eFiling) and payment are due by Friday, 26 February 2027. Companies with a different financial year-end follow the same pattern: the second payment is due on the last day of their financial year.

The second payment is where you square up. You estimate your taxable income for the full year, calculate the tax on it, and pay the balance after deducting your August payment and any PAYE already withheld.

How to Prepare Your Second Provisional Tax Payment: 5 Steps

Leaving the calculation to the final week is one of the main reasons business owners overpay, underpay or miss the deadline altogether. Work through these steps in early February:

1. Bring your books up to date. Reconcile your bank accounts and record all income and expenses up to the end of January. You cannot estimate a year you have not tracked.

2. Forecast February. Add a realistic estimate for the final month, based on confirmed invoices and recurring costs.

3. Include once-off items. Capital gains from selling property, shares or business assets must be included in your estimate. So must any large contract income that has accrued, even if the client has not paid yet.

4. Claim legitimate deductions. Retirement annuity contributions made before the end of February are deductible, up to 27.5% of your income, capped at R430 000 for the 2026/27 year. Business expenses, wear-and-tear on equipment and qualifying home office costs also reduce your taxable income.

5. Calculate, submit and pay. Submit your IRP6 on eFiling, which calculates the tax on your estimate. Subtract your first payment and pay the difference, allowing time for the payment to clear before the deadline.

A simple example: If eFiling calculates R96 000 tax on Thabo's full-year estimate and he paid R40 000 in August, his February payment is R56 000.

Provisional Tax Penalties: What Underestimating Costs You

SARS expects your February estimate to be reasonably accurate. When your final assessment comes through, it compares your estimate with your actual taxable income and applies these rules:

• Taxable income of R1 million or less: your estimate must be at least 90% of your actual taxable income, or at least equal to your "basic amount" (the taxable income on your most recent assessment), whichever is lower.

• Taxable income above R1 million: your estimate must be at least 80% of your actual taxable income. The basic amount offers no protection.

If you fall short, SARS charges an underestimation penalty of 20% on the tax shortfall. For example, a Durban restaurant owner with actual taxable income of R1.5 million needed an estimate of at least R1.2 million. An estimate of R900 000 would trigger a penalty on the gap.

Two other penalties catch people out. Paying late attracts a 10% penalty on the amount due plus interest, even if you are only a day late. Submitting your IRP6 late is worse: SARS treats a late return as a nil estimate, which almost always triggers the 20% underestimation penalty as well.

Protect Your Cash Flow Before February

The timing of the second payment is brutal for many SA small businesses. It lands just after the festive season shutdown and the expense-heavy month of January, with its school fees and slow trading.

The solution is to budget for provisional tax every month rather than treating it as a February surprise:

• Transfer a fixed percentage of every payment you receive into a separate savings account reserved for SARS.

• Review your estimate in November or December, so you know the size of the bill while you still have time to save for it.

• If you discover after year-end that you underpaid, make a voluntary third "top-up" payment. Individuals with a February year-end have until 30 September 2027. It reduces the interest SARS charges, although it does not cancel an underestimation penalty.

This is exactly where working with an accounting firm earns its keep. At Saber Accounting, we keep our clients' books current throughout the year, so their provisional tax estimates are based on real numbers rather than guesswork, and every IRP6 is submitted on time.

Get Ahead of the February Deadline

Your second provisional tax payment is the last chance to get your tax right for the year before SARS assesses it. Keep your books current, include every source of income, claim the deductions you are entitled to and pay by 26 February 2027. For SA entrepreneurs who already juggle tight cash flow after the festive season, a little preparation now prevents penalties, interest and a stressful scramble at the end of February. If you are unsure whether your estimate will hold up, have it checked before you submit.

Ready to get your finances in order? At Saber Accounting, we help South African small businesses stay compliant, cut unnecessary costs, and make smarter financial decisions. Whether you need help with provisional tax, tax planning or keeping your books up to date, our expert team is here. 👉 Book a free consultation today