What is Code 3702 on a South African Payslip?
Reimbursive travel allowance explained — how it differs from a travel allowance, when it is tax-free, the SARS prescribed rate, and why a logbook is non-negotiable.
3702Code 3702 is a reimbursive travel allowance — your employer reimburses you per kilometre for business travel in your personal vehicle. At or below the SARS prescribed rate of R4.95/km (2025/2026), and without a code 3701 allowance running alongside it, the amount is completely tax-free. A valid logbook is required.
What Code 3702 Means
Code 3702 is a reimbursive travel allowance — an amount your employer pays to compensate you for the cost of using your own vehicle for business-related travel. Unlike a standard travel allowance (code 3701), which is a fixed monthly amount paid regardless of actual distances driven, code 3702 is based on the actual business kilometres you travel, multiplied by a rate per kilometre.
The key attraction of code 3702 is its potential to be completely tax-free. SARS publishes a prescribed rate per kilometre each year. If your employer reimburses you at or below this rate, and you do not simultaneously receive a code 3701 travel allowance, the entire reimbursement is exempt from income tax — no PAYE is deducted and there is nothing to declare on your return.
This makes code 3702 genuinely more efficient than code 3701 for many employees, particularly those who drive significant business distances. The tax saving can be substantial.
Code 3701 vs Code 3702 — Key Differences
Travel Allowance
Fixed monthly amount. 80% included in taxable income regardless of actual km. Requires logbook to claim deduction at year-end. PAYE deducted monthly on 80% of amount.
Reimbursive Travel
Paid per actual km driven for business. Completely tax-free at the SARS prescribed rate (R4.95/km). Requires a logbook. No PAYE if rate does not exceed prescribed rate.
The SARS Prescribed Rate and Tax-Free Conditions
For code 3702 to be completely tax-free, three conditions must all be met:
- The reimbursement rate must be at or below the SARS prescribed rate — R4.95 per kilometre for the 2025/2026 tax year (1 March 2025 to 28 February 2026)
- The employee must not also receive a code 3701 travel allowance from the same employer
- The employee must keep a valid logbook recording business kilometres
If any one of these conditions is not met, the reimbursement becomes taxable. SARS publishes the prescribed rate at the start of each tax year — verify the current rate at sars.gov.za before relying on any specific figure.
How It Affects Your Take-Home Pay
When your employer reimburses you at exactly the SARS prescribed rate:
| Item | Amount |
|---|---|
| Business km driven in the month | 800 km |
| Employer reimbursement rate | R4.95/km |
| Gross code 3702 amount | R3,960 |
| SARS prescribed rate (2025/2026) | R4.95/km |
| Taxable portion (rate does not exceed prescribed rate) | R0 |
| PAYE deducted on code 3702 | R0 — fully tax-free |
Now compare this to a code 3701 travel allowance of R3,960 per month:
| Scenario | Gross Amount | Taxable Portion | PAYE at 26% | Net Received |
|---|---|---|---|---|
| Code 3702 at prescribed rate | R3,960 | R0 | R0 | R3,960 |
| Code 3701 (80% included) | R3,960 | R3,168 | R824 | R3,136 |
If you receive both a code 3701 travel allowance and a code 3702 reimbursement from the same employer, the reimbursement becomes taxable regardless of the rate. The logic: you are already being compensated for travel costs through the 3701 allowance. SARS treats the additional 3702 reimbursement as a further benefit subject to PAYE. If your employer switches you from 3701 to a pure 3702 arrangement, confirm in writing that the 3701 is stopped.
Frequently Asked Questions
What does code 3702 mean on my payslip?
Code 3702 is a reimbursive travel allowance — your employer pays you per kilometre for business travel in your personal vehicle. At the SARS prescribed rate (R4.95/km for 2025/2026), and without a code 3701 allowance running alongside, this amount is completely exempt from income tax. You need a logbook to substantiate the kilometres claimed.
Is code 3702 taxable?
Not if the three conditions are met: reimbursement at or below the SARS prescribed rate, no code 3701 running simultaneously, and a valid logbook. If your employer pays above the prescribed rate, the excess is taxable income. If you receive both 3701 and 3702, the 3702 reimbursement becomes fully taxable.
What is the SARS prescribed rate for 2025/2026?
The SARS prescribed rate for reimbursive travel for the 2025/2026 tax year is R4.95 per kilometre. This rate is published annually by SARS in a Government Gazette. Always verify the current rate at the start of the tax year — it changes, and using an outdated figure could result in unexpected tax liability.
Do I need a logbook for code 3702?
Yes — a logbook is non-negotiable. To claim the tax exemption, you must record: the date of each trip, the odometer reading at start and end, the destination, and the business purpose. SARS may request it during an audit. Without it, SARS can disallow the exemption and tax the full reimbursement. Digital logbook apps are acceptable as long as all required information is captured.
What is the difference between code 3701 and code 3702?
Code 3701 is a fixed monthly travel allowance — 80% is always included in taxable income for PAYE purposes, and you claim a deduction at year-end based on your logbook. Code 3702 is a per-km reimbursement based on actual business kilometres driven — it can be completely tax-free at the prescribed rate. Employees with high business kilometres are usually better off under a 3702 arrangement.
What if my employer reimburses me above the prescribed rate?
The excess over R4.95/km is taxable income. If your employer pays R6.00/km, the R1.05/km excess is subject to PAYE each month. Your employer should deduct PAYE on the excess and reflect the full amount under code 3702 on your IRP5. On your annual return, the taxable portion is included in your income and assessed by SARS alongside your other income.