The 2025 Budget Speech has sparked discussions around tax policies, economic stability, and the financial well-being of South African citizens. Finance Minister Enoch Godongwana delivered the revised 2025 Budget Speech on 12 March, addressing key fiscal and economic measures.
Bertie Nel, Head of Financial Planning and Advice at Momentum, provided key insights into the budget’s impact, highlighting both its challenges and opportunities for individuals and businesses. “One of the key takeaways from this year’s budget is the 0.5% increase in VAT, which, although lower than initially anticipated, will still affect consumers.”
Nel explains that for an average household spending R10,000 per month, the VAT adjustment equates to an additional R50 in expenses. While this is significantly less than a potential 2% increase, it still places some strain on lower-income households.
“Interestingly, the government chose not to adjust personal income tax brackets for inflation. This means taxpayers will not face additional direct taxation, but their purchasing power may gradually erode due to rising costs. Similarly, there are no new tax incentives for individuals or businesses, leaving many to navigate the financial landscape without additional relief measures,” he says.
Despite the VAT increase, the government has taken steps to mitigate financial strain on households, including:
• No increase in the fuel levy, saving consumers an estimated R4 billion.
• Expansion of VAT zero-rated food items to include essentials such as canned vegetables and dairy blends.
• Above-inflation social grant increases to support vulnerable citizens.
On the corporate side, businesses continue to grapple with economic constraints such as logistics bottlenecks and high electricity costs. Corporate tax collections have declined in recent years, reflecting tougher trading conditions.
Nel noted no major changes have been made to retirement incentives, aside from administrative clarifications in the pension fund sector. He emphasises that while these adjustments don’t significantly impact the average citizen, they underscore the importance of disciplined financial planning
Nel stresses that navigating economic uncertainties requires proactive financial planning. He advises South Africans to partner with trusted financial advisors who can help them make informed decisions, adjust their budgets, and plan for long-term stability.
While the 2025 budget offers no dramatic tax increases, it also provides no significant relief for individuals and businesses. As economic pressures persist, strategic financial management will be essential for both households and companies looking to maintain financial health in the coming year.
Bertie Nel is available to discuss key points from the above, including the impact of the 0.5% VAT increase on consumers, especially those in lower-income brackets, and the lack of inflation adjustments to personal income tax brackets. He can also address the significance of no fuel levy increase, the implications of declining corporate tax collections for businesses, any changes to retirement policies or savings incentives, and provide financial planning advice to help South Africans adjust their budgets and secure long-term financial stability.
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