What is Code 3802 on a South African Payslip?
Your company vehicle fringe benefit explained — how the 3.25%/3.5% calculation works, why it increases your PAYE, and how a logbook can reduce the tax impact at year-end.
3802Code 3802 is the taxable fringe benefit of a company vehicle made available to you by your employer. SARS values this benefit monthly at 3.25% of the vehicle's retail price (with maintenance plan) or 3.5% (without). This amount is added to your taxable income and increases the PAYE deducted from your salary.
What Code 3802 Means
Code 3802 is a fringe benefit code in the 3800 series — it records the taxable value of a benefit your employer provides that has monetary worth but is not paid as cash. Specifically, 3802 covers the right to use a motor vehicle that your employer purchased outright (as opposed to leased via an operating lease, which uses code 3816).
SARS takes the position that any private use of an employer-owned vehicle — including commuting — constitutes a taxable benefit. This means that even if you only drive the company car to and from work, the full monthly fringe benefit is calculated and included in your remuneration for PAYE purposes.
The fringe benefit value is governed by Paragraph 7 of the Seventh Schedule to the Income Tax Act. It is not based on what you actually spend driving the car — it is a prescribed percentage of the vehicle's cost to your employer, applied monthly regardless of km driven.
How the Code 3802 Fringe Benefit is Calculated
The monthly fringe benefit is a percentage of the vehicle's determined value — defined as the retail purchase price paid by your employer including VAT, but excluding finance charges, interest, and insurance.
With Maintenance Plan
Without Maintenance Plan
Worked Example — Code 3802 on a R400,000 Vehicle
An employee is provided with a company vehicle that cost the employer R400,000 (including VAT). A maintenance plan was included in the purchase price. The employee earns R35,000 gross salary per month.
| Item | Amount |
|---|---|
| Vehicle retail price to employer (incl. VAT) | R400,000 |
| Maintenance plan included? | Yes → 3.25% |
| Monthly fringe benefit (R400,000 × 3.25%) | R13,000 |
| 80% included in PAYE remuneration | R10,400 |
| Monthly salary (code 3601) | R35,000 |
| Effective taxable income for PAYE | R45,400/month |
| Additional monthly PAYE from fringe benefit (at 31% marginal rate) | ≈ R3,224 |
The R13,000 fringe benefit adds approximately R3,224 to the employee's monthly PAYE deduction — effectively reducing take-home pay by that amount even though no cash was received. This is the most common reason employees are surprised by high PAYE when they have a company car.
Reducing Your Code 3802 Fringe Benefit at Year-End
The fringe benefit cannot be reduced by your employer on your monthly payslip — PAYE is calculated on the full amount each month. However, when you file your annual income tax return, SARS allows you to claim a reduction based on actual business kilometres driven during the year.
To claim this reduction you must have a SARS-compliant logbook recording every business trip with date, starting point, destination, distance and business purpose. SARS calculates the business-use percentage of your total km and reduces the taxable fringe benefit proportionally — resulting in a tax refund at assessment.
Note: commuting between home and your regular workplace is not business use for this purpose. Only genuine business trips away from your regular place of work qualify.
Frequently Asked Questions
What does code 3802 mean on my payslip?
Code 3802 is the taxable fringe benefit of a company vehicle your employer has made available to you. SARS treats private use of an employer-owned vehicle — including commuting — as taxable income. The benefit is calculated monthly as 3.25% of the vehicle's retail price (with maintenance plan) or 3.5% (without), and this amount is added to your taxable income for PAYE purposes.
How is the code 3802 fringe benefit calculated?
Monthly fringe benefit = the vehicle's determined value (retail price including VAT, excluding finance charges) multiplied by either 3.25% (if a maintenance plan was included in the purchase price) or 3.5% (if no maintenance plan). This amount is the monthly code 3802 value that appears on your IRP5 and contributes to your annual remuneration for PAYE.
Why does code 3802 increase my PAYE?
SARS treats private use of a company vehicle as equivalent to receiving extra income. The 3802 fringe benefit value is added to your code 3601 salary when your employer calculates PAYE — raising your effective taxable income and increasing the monthly PAYE deducted from your actual cash salary. The more expensive the vehicle, the larger the fringe benefit and the higher the monthly PAYE impact.
Can I reduce the code 3802 tax with a logbook?
Yes, but only at year-end via your tax return — your employer cannot reduce the monthly PAYE at source. With a SARS-compliant logbook recording all business km, SARS reduces the taxable fringe benefit in proportion to the business percentage of your total km for the year, resulting in a refund at assessment.
Does commuting count as business use for code 3802?
No. Travel between your home and your regular workplace is private use under SARS rules — even in a company vehicle. Only trips for genuine business purposes away from your regular place of work qualify as business use for the purposes of reducing your code 3802 fringe benefit.
What is the difference between code 3802 and code 3816?
Code 3802 applies when your employer purchased the vehicle outright or financed it. Code 3816 applies when the employer acquired it under a qualifying operating lease. For 3816, the fringe benefit is the actual lease cost plus fuel rather than the 3.25%/3.5% percentage of determined value used for 3802. Check your IRP5 to see which code applies to your vehicle.