BUSINESS OWNER BRIEFING

Budget 2027

What the Irish Budget means for business owners, entrepreneurs and family businesses

Budget announced 6 October 2026

THE COMMERCIAL TAKEAWAY
Budget 2027 offers useful tax improvements for business owners, particularly on business disposals, succession and personal tax. The main pressure point remains employment cost: higher wages, PRSI, pension and compliance costs will need to be built into 2027 budgets.

Six points that matter

“Good financial planning creates choices — whether the goal is investment, expansion, succession or simply greater financial security.”

• CGT: The standard Capital Gains Tax rate falls from 33% to 31% for most disposals from 7 October 2026.
• CAT: Gift and inheritance tax thresholds increase, creating more headroom for family succession planning.
• Payroll: The national minimum wage rises to €14.94 per hour from 1 January 2027, increasing employment costs.
• R&D: The 35% R&D tax credit is retained, with changes intended to improve access and cash-flow value.
• Owner-managers: Income tax bands and key tax credits increase from 2027.
• Investments: Tax on Irish funds, certain offshore funds/ETFs and relevant life assurance products is to reduce to 35% from 1 January 2027.

1. Running the business: cost, cash flow and compliance

• Minimum wage: The adult rate is expected to increase by €0.79 to €14.94 per hour from 1 January 2027. Employers should budget for the direct increase plus knock-on effects on pay differentials, holiday pay, employer PRSI and pension costs.
• Employer PRSI: The weekly earnings threshold for the lower employer PRSI rate increases from €552 to €600 from 1 January 2027, providing some cushioning at the lower end of payroll.
• Preliminary corporation tax: Companies may satisfy the preliminary tax obligation by paying 80% of the current-year liability by the final preliminary tax date, with the balance required to bring the payment to 100% due within four months after year end. The small-company threshold increases from €200,000 to €350,000, and the existing 45% deeming provision is to be removed.
• Enhanced Reporting Requirements: Employers are to be offered a choice between real-time reporting and monthly reporting for reportable benefits and expenses, which should reduce administrative friction for many SMEs.

Possible Business action: Update 2027 payroll budgets now. Companies with volatile profits should also review whether the revised preliminary tax mechanics improve cash-flow planning.

2. Growth, innovation and scaling

“Growth is most valuable when it translates into stronger cash flow, greater resilience and long-term shareholder value.”

• R&D tax credit: The 35% rate remains in place. Budget 2027 announces higher subcontracting limits, an increase in the first-year payment threshold to €105,000, a payroll-based uplift mechanism and changes aimed at improving the treatment of qualifying clinical-trial activity.
• Start-up company relief: The corporation tax relief for qualifying start-up companies is to be extended to 31 December 2030.
• Knowledge Development Box: The KDB is to be extended to 1 January 2032, with further technical changes for existing claimants.
• Enterprise supports: Further funding is earmarked for scaling Irish businesses, regional enterprise, technology centres, tourism and strategic industrial projects, alongside broader infrastructure investment.

Possible Business action: Businesses incurring software, engineering, scientific, clinical or product-development costs should revisit R&D eligibility before year end rather than waiting until the corporation tax return is being prepared.

3. Selling a business, extracting value and succession

“Good businesses plan for growth; great businesses also plan for succession and exit.”

• Capital Gains Tax: The standard CGT rate falls from 33% to 31% for most disposals made on or after 7 October 2026. This is relevant to business sales, share buy-backs, liquidations, restructurings and other disposals where a specific CGT relief does not shelter the gain.
• Revised Entrepreneur Relief: The €1.5 million lifetime limit remains in place, with qualifying gains taxed at 10%. Budget 2027 does not increase the lifetime cap further. The lower standard CGT rate narrows the differential, but the relief can still represent a 21 percentage-point saving on qualifying gains within the available lifetime limit.
• Capital Acquisitions Tax: For gifts and inheritances taken on or after 7 October 2026, the thresholds increase to Group A €420,000, Group B €44,000 and Group C €22,000. The CAT rate remains 33%.
• Business and Agricultural Relief: No headline reduction was announced to the 90% relief rate. These reliefs remain important for family-business and farm succession, subject to detailed qualifying conditions and clawback rules.

Possible Planning opportunity: If a sale, liquidation, family transfer or succession is already being considered, re-run the numbers using the new CGT rate and CAT thresholds before fixing transaction dates.

4. Owner-manager and personal finance changes

• Income tax bands: The standard-rate band rises to €46,500 for a single person, €50,500 for a Single Person Child Carer Credit claimant and €55,500 for a married couple/civil partnership with one income. The usual second-income limitation continues for two-income couples.
• Tax credits: The Personal Tax Credit, Employee Tax Credit and Earned Income Tax Credit each increase to €2,125. The Home Carer Tax Credit rises to €2,050.
• USC: The ceiling of the 2% USC band increases to €30,300.
• Investment funds and life assurance: The tax rate on Irish investment funds, certain equivalent offshore funds/ETFs and relevant life assurance products is to reduce from 38% to 35% from 1 January 2027.
• Irish Investment Account: A new retail investment account is proposed from 1 July 2027. Budget Day material indicates an annual 1% tax on value above a €50,000 tax-free threshold and a maximum annual contribution of €12,000. Detailed legislation will be important before relying on the regime.
• Rent Tax Credit: The maximum increases to €1,150 for a single claimant and €2,300 for a jointly assessed couple.
• Rent-a-Room Relief: The annual tax-free threshold increases from €14,000 to €16,000, with a proposed extension to certain qualifying detached accommodation units.
• Help to Buy: The maximum refund increases to €35,000 from 7 October 2026, subject to the qualifying conditions.                           

5. Property and sector-specific measures

• Derelict Property Tax: A new 7% Derelict Property Tax is announced, with the first filing deadline expected in June 2028. Definitions, valuation rules and exemptions will be important for affected property owners.
• Residential Zoned Land Tax: A further opportunity is to be provided for landowners to seek a 2027 exemption where rezoning is requested to reflect genuine economic activity on the land.
• Hospitality VAT: Budget 2027 does not introduce a new broad hospitality VAT cut. The 9% rate for restaurant/catering services and hairdressing had already been restored from 1 July 2026 under Budget 2026.
• Electric vehicles: VRT relief for qualifying electric vehicles is extended to 31 December 2028. VRT rates increase by one percentage point for certain higher-emission cars.
• Farmer flat-rate addition: The flat-rate addition for unregistered farmers increases from 4.5% to 4.8% for 2027.

What could business owners do now?

Transactions — Re-model disposals, share buy-backs, liquidations and restructurings using the 31% standard CGT rate and test whether Revised Entrepreneur Relief or another relief gives a better result.

Succession — Revisit family transfers where CAT exposure was close to the old thresholds, and review Business Relief or Agricultural Relief conditions before implementing a transfer.

Payroll — Update 2027 wage budgets for the €14.94 minimum wage, PRSI changes, auto-enrolment and knock-on pay differentials.

R&D — Identify qualifying projects and subcontracting costs early, and preserve contemporaneous technical and financial records.

Cash flow — Review preliminary corporation tax payment timing where the revised rules could reduce unnecessary early funding.

Owner remuneration — Revisit the salary, pension and dividend mix for 2027 in light of the wider income tax bands and higher credits.

Investments — Review personal and corporate investment structures after the reduction in fund/life assurance tax, but wait for legislation before relying on the proposed Irish Investment Account.

There may be more planning value in Budget 2027 than in Budget 2026, particularly for disposals, succession, R&D and owner-manager taxation. For many SMEs, however, the immediate 2027 issue will be controlling the combined cost of wages, PRSI, pensions and compliance.

Overall view

“The objective of financial planning is not complexity. It is to create better commercial decisions.”

For business owners, Budget 2027 is more useful than a simple “tax-cut” headline suggests. The reduction in the standard CGT rate, higher CAT thresholds and better personal tax bands improve the environment for exits, succession and owner remuneration. At company level, the R&D, preliminary tax and reporting changes should make the system somewhat easier to operate. The counterweight is employment cost, which remains a central budgeting issue for 2027.

Planning a sale, succession, investment or remuneration review?
Budget 2027 may change the numbers — review the position before implementing the transaction.

This newsletter is an original summary of Budget Day material and professional commentary available on 6 October 2026. Principal sources reviewed include Revenue and Government expenditure material.

Important: Budget announcements are not a substitute for enacted legislation. Effective dates, eligibility conditions and transitional provisions should be checked against the Finance Act, Revenue guidance and commencement orders before implementing transactions.