Minister’s budget provides the basic tools for saving

Save, save and save some more. This was the message from Finance Minister Enoch Godongwana. Liberty Financial Adviser Carlo Gil offers his views on how to make the most of this year’s Budget.

Saving is the cornerstone of financial planning and 2026 will see some significant improvement to our ability to put money aside.

• The tax-free annual investment limit will be increased from R36 000 to R46 000 per year
• The annual cap on retirement fund deductions will be raised from R350 000 to R430 000, allowing individuals to invest more each year.
• The single discretionary allowance for investments offshore has increased to R2million per annum.
• The Minister has also offered further relief by adjusting personal income tax brackets and rebates fully in line with inflation.

The adjustment of tax brackets puts immediate money back into the pockets of low to middle income earner’s and this can make a real difference to household cash flow. This may seem modest on a monthly basis, but over a year it can create additional capacity, whether to reduce debt, increase savings, or strengthen emergency reserves. Used wisely, this relief can make a tangible difference to household financial resilience in any situation. The increase of the reserve bank’s single discretionary allowance from R1million to R2million will also increase opportunity for offshore investment.

The past two years has seen no inflation-linked adjustment to personal tax thresholds, and this has been labelled as a stealth tax. This means that people receiving salary raises in line with inflation were in many cases getting less money in their pockets at the end of day because their raises pushed them into higher tax brackets.

The ability to increase your tax-free savings is significant, this is an opportunity to review financial strategies proactively. With increased tax-free limits, investors should consider whether they are maximising these vehicles. Even small incremental increases in contributions, when compounded over time, can materially improve savings outcomes. This all means having cash to hand when you need it most.

The annual cap on retirement fund deductions has also been increased, allowing savers to put even more money aside for retirement in a tax efficient way. Many people can increase their contributions, accelerate their retirement planning while simultaneously reducing their current tax burden. This dual benefit is not something to overlook. The increased annual cap means that many individuals who previously reached their tax deduction ceiling now have room to invest more efficiently.

In a year where fiscal prudence and personal financial discipline are more important than ever, this Budget provides the tools, but it remains up to each individual to use them strategically along with their Financial Advisor to maximize these benefits in their personal portfolio.