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Paul Hutchinson

With the repo rating having more than doubled in less than 2 years, the amount you can hold in an interest-yielding bank or money market account before being subject to income tax at your marginal tax rate has reduced materially. Paul Hutchinson, Sales Manager at Ninety One, considers alternative, more tax-efficient solutions.

Having just completed my 2022/23 income tax return, it became very clear very quickly just how punitive interest income now is from a tax perspective. The repo rate has more than doubled, from a low of 3.5% as recently as October 2021 to 8.25%, following the 50 basis-point rate hike in May 2023, as illustrated in the table below. While placing the economy and the consumer under increasing pressure, the higher interest rates on offer have been welcomed by savers and, no doubt, the South African Revenue Service (SARS)!

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