Budget 2027: what changes for Irish business owners

By Richie Lennon ACA. Reviewed 13 October 2026.

Photo: Jakub Żerdzicki / Unsplash.

Budget 2027 changes the cost of employing people, the tax on a sale and some of the timing of company tax payments. The minimum wage rises to €14.94 in January. Standard Capital Gains Tax has fallen to 31%. R&D and preliminary Corporation Tax reforms could improve cash flow, but their application needs checking before you change a payment or count on a claim.

For an owner, the useful question is what those changes do to your own numbers. Here is what I would check.

Budget 2027 and existing changes to plan for

Sources: Department of Finance tax measures, Government employer measures, Revenue’s CAT thresholds and Revenue’s existing EV BIK schedule.

My view on this Budget

I’m an accountant and I find it hard to get excited about the Budget. I followed it this year out of professional duty more than enthusiasm.

No surprises. Kites flown. The safe political path taken, always.

There are useful changes in this Budget. But my concern is what happens behind the annual announcements. The Irish Fiscal Advisory Council’s assessment is that the State plans to spend about six of every seven euro it receives in corporation tax, saving one. It warns against aimless drift.

The income tax system is progressive. That part broadly works. Relying on uncertain receipts to pay for recurring commitments is the part that bothers me.

I would apply the same test to a business. If a large customer gave you an unusually good year, how much of that money would you commit to costs you cannot easily reverse?

What will the minimum wage increase cost your business?

The 79-cent increase is 5.6%, rounded. For a hospitality, retail, beauty or wellness business, it belongs in the pricing and staffing plan now.

Here is a worked illustration for an adult employee paid for 39 hours each week, for 52 weeks. It assumes unchanged hours and no overtime.

These are wage costs only. Employer PRSI, employer pension contributions where applicable, overtime and changes to other pay grades need separate calculations.

Suppose the ten-person business retains 40 cent from each additional euro of sales after the variable costs of making those sales. Covering this wage increase alone requires €40,053 of additional annual sales: €16,021.20 divided by 40%.

That illustration assumes the existing team can handle the extra sales without further fixed costs. Use revenue excluding VAT and a contribution margin that does not count the same wage increase twice.

The useful number is the contribution left to pay the bill. A higher sales target without the margin calculation tells you very little.

How does the higher employer PRSI threshold help?

The weekly threshold rises from €552 to €600. In the example above, weekly gross pay moves from €551.85 to €582.66, so the higher threshold prevents the wage increase alone pushing this employee into the higher employer rate.

It does not cancel the wage increase. Nor should you deduct the Government’s headline PRSI saving from every employee’s existing annual cost. The result depends on their earnings and the comparison you are making.

Check actual pay, including additional hours and bonuses, employee by employee. Then update the full employer cost in your payroll and cash plan.

Preliminary Corporation Tax: useful flexibility, once it applies

Two announcements matter particularly to growing companies:

• An expanded top-up mechanism would allow at least 80% of the current year’s liability to be paid by the final preliminary tax instalment date, with the total brought to 100% within four months of the accounting period end.
• The small-company threshold would rise from €200,000 to €350,000 of prior-year Corporation Tax liability. This is a tax-liability test, not a turnover or profit threshold.

On an illustrative €100,000 liability, the proposed mechanism describes €80,000 paid by the relevant date and €20,000 paid within the top-up window. The tax bill is still €100,000.

The Budget announcement does not establish which accounting periods can use the change. Until the legislation and Revenue guidance establish that it applies to you, keep paying under the current rules.

Keep the company and personal tax calendars separate. A director’s Form 11 deadline does not set the company’s Corporation Tax deadline. Our preliminary tax guide explains the distinction and the current payment rules.

R&D: the payment date is still the problem

I paid attention to the R&D reforms. Hoping for more, expecting less.

The changes announced include a higher first-year payment threshold, from €87,500 to €105,000; subcontracting limits based on the higher of 20% of qualifying in-house expenditure or €200,000; and an addition to the qualifying cost base calculated as 5% of qualifying R&D wage costs, subject to conditions.

That last measure is not a five-percentage-point increase in the credit rate. The first-year payment change also affects timing, rather than increasing the total credit by €17,500.

All positive changes are welcome. But raising the limit is incrementalism if a start-up still cannot plan around the payment.

The question I hear from businesses is simple: when will the money arrive? For a bootstrapped company or one between funding rounds, that date matters as much as the headline relief. A credit in a calculation does not pay wages. Cash in the bank does.

As I said in a recent LinkedIn discussion, if a start-up cannot rely on the money arriving, for risk and decision-making purposes it may as well not exist. I argued for 30 to 60-day payment terms. That is what I would like to see, not a turnaround Revenue currently guarantees.

For an owner, I would start with three questions. Does the work qualify? Can the team show what it did and why? When can the business realistically receive or use the credit?

The claim needs records of the technical work as well as its cost. A project name and a total from the accounts will not answer the eligibility question. Revenue’s qualifying criteria are the starting point.

Subcontracting relief remains linked to qualifying work and the in-house expenditure rules. It is not a blanket credit for outsourced development. The clinical-trial change also requires further legislation.

Our R&D tax credit guide covers the rate for the relevant accounting period, the records, the claim deadline and instalments. Build a delayed-receipt scenario into the cash plan before committing the expected credit to new spending.

Selling or passing on the business

Capital Gains Tax is now 31% at the standard rate

The standard rate fell from 33% to 31% for disposals from 7 October 2026. Development land remains at 33%.

For a €1 million taxable gain subject entirely to the standard rate, the difference is €20,000: €330,000 compared with €310,000. This assumes the same taxable gain after any applicable deductions and no special relief changing the rate. A €1 million sale price is a different starting point.

Before applying that saving to your exit plan, establish who is selling what. Selling your shares personally and having the company sell its assets can produce different tax outcomes. Entrepreneur Relief, retirement relief, losses and exemptions may change the calculation substantially.

Re-run a live transaction using its actual disposal date and structure. The CGT guide also explains why paying the tax and filing the return have different deadlines.

Higher CAT thresholds do not reset earlier gifts

For gifts and inheritances taken from 7 October 2026, the thresholds are:

The relationship determines the group, subject to exceptions. A parent-to-child transfer generally falls within Group A. CAT’s standard rate remains 33%.

The threshold covers cumulative taxable benefits within the same group. Revenue requires earlier benefits since 5 December 1991 to be included. It is not a fresh allowance for every gift or every person giving one.

For a business transfer, eligibility for relief can matter more than the threshold increase. Get the valuation, ownership history and succession plan reviewed together.

Electric company cars: the BIK relief keeps shrinking

Budget 2027 announces no further extension of the existing EV Benefit-in-Kind relief. Its EV extension is for VRT, to the end of 2028. That does not freeze your BIK calculation.

Last year’s Budget introduced the lower A1 percentage rates for zero-emission cars and extended the general Original Market Value reduction on a tapered basis. The A1 rates remain. The temporary reductions keep falling under the existing schedule:

These are reductions in the value used to calculate BIK, not tax credits. The EV-specific reduction applies to fully electric cars, including used cars, but not hybrids. Revenue sets out the reliefs here.

Take a fully electric company car with €50,000 Original Market Value, available for the full year, with 24,000 business kilometres and no employee contribution. The A1 percentage is 15%:

• 2026: (€50,000 − €30,000) × 15% = €3,000 annual taxable benefit.
• 2027: (€50,000 − €15,000) × 15% = €5,250 annual taxable benefit.

Same car, same mileage, €2,250 more taxable pay. That is not €2,250 more tax; the actual deduction depends on the driver’s Income Tax, USC and PRSI position. Revenue’s calculation rules also explain why a second-hand purchase price does not replace Original Market Value.

The year you buy the car does not lock in that year’s relief for its lifetime. Recalculate existing cars as well as new purchases. “The company can pay for it” is not enough of a reason to buy. Work out the cost over the years you expect to keep it, including the driver’s tax. Our BIK guide covers the wider rules.

Other changes worth putting on the list

Personal tax from January. The single person’s standard-rate band rises to €46,500. The personal, employee and earned income credits each rise to €2,125, where applicable, and the top of the 2% USC band rises to €30,300. These affect personal take-home pay. They do not fund the employer’s wage increase, and an owner should not assume all three credits apply together.

Start-up company relief. Section 486C is being extended to qualifying trades commencing by 31 December 2030. It can reduce qualifying Corporation Tax in the first five years, subject to liability limits, PRSI and other conditions. Revenue’s eligibility rules still matter. Incorporating another company does not by itself establish entitlement.

Funding reliefs. The intended extensions of EII, SURE, the Start-Up Capital Incentive and Angel Investor Relief depend on the revised EU State aid framework. Check the final rules before promising an investor relief. An announced extension does not make every company or investment eligible.

Personal Investment Account. The planned launch is 1 July 2027, with a €12,000 annual contribution limit and a 1% annual charge on account value above €50,000, calculated using average daily values. The levy is based on value, not simply the year’s investment profit. The account does not remove the need to consider tax on taking money out of your company. Compare it with your wider personal plans once the final rules and provider terms are available.

What I would do before January

1. Rebuild the wage budget. Include people just above minimum wage, where pay differentials may also need a decision. Add employer costs and the contribution needed to cover them.
2. Put the personal and company tax dates in one calendar. Show each liability separately, who pays it and which bank account funds it.
3. Revisit any sale or family transfer already under way. Use the new rates where applicable, with the actual reliefs and transaction structure.
4. Review the R&D file with the people doing the work. Establish eligibility and evidence before treating the expected claim as available cash.
5. Recalculate company EV benefits for 2027. Use the reduced relief even if the driver keeps the same car. Compare purchases over the full ownership period.
6. Keep proposed relief in a separate forecast scenario. Move it into the main cash plan when eligibility, timing and the applicable rules are clear.

The immediate personal tax date is 18 November 2026 if you both file your 2025 return and make the appropriate payments through ROS. Otherwise, the ordinary 31 October deadline applies. This cycle includes the 2025 balance and 2026 preliminary Income Tax. Revenue sets out the pay-and-file requirements here.

A Budget summary is useful once. The numbers need attention throughout the year. If your business has grown and you want an accountant who answers questions, flags the dates and keeps you clear on where you stand, see if we’re a fit.

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