Budget 2027 Ireland: What Small Businesses and Accountants Need to Know

Budget 2027 Ireland: Minister for Finance Simon Harris and Minister for Public Expenditure Jack Chambers delivered Budget 2027 on 6 October 2026, a package worth roughly €8.5 billion split between new spending and tax measures. For small business owners, the headlines are a capital gains tax cut, a further round of PRSI increases, enhancements to the R&D tax credit, and a higher threshold for the simpler “small company” preliminary tax rules.

None of this is abstract. Every one of these changes lands on a payroll run, a tax return, or a decision about when to sell an asset or hire the next employee. This guide pulls together what is confirmed so far, flags what is still subject to the Finance Bill, and explains what each measure actually means if you run, or advise, a small or medium business in Ireland. As with any Budget, some of the detail will only be finalised once the Finance Bill is published and passed, so treat the figures below as the Budget Day position rather than the last word.

Capital Gains Tax: The Headline Cut

The standard rate of Capital Gains Tax falls from 33% to 31% for disposals made on or after 7 October 2026. Gains on development land are unchanged and remain taxed at 33%. This is the first cut to the headline CGT rate in years, and it matters most to business owners who are weighing up when to sell shares, a property investment, or the business itself.

Reliefs such as EII, SCI, SURE and Angel Investor Relief, which reduce the tax cost of early-stage investment, have also been extended, although this is subject to the adoption of the new EU General Block Exemption Regulation. If you are weighing up an equity finance investment for your company, or sitting on investor shares you are thinking of exiting, this is a good moment to talk to a tax advisor about timing the disposal around the new rate and the relief extensions.

PRSI Increases: What Employers Need to Budget For

PRSI is rising again, continuing a trend employers have had to plan around for several Budgets running. From 1 October 2026, employee PRSI increased by 0.15 percentage points to 4.35%, and employer PRSI rose to 11.4%. A further increase is already scheduled for 1 October 2027, taking employee PRSI to 4.5% and employer PRSI to 11.55%.

Effective date	Employee PRSI	Employer PRSI
Before 1 October 2026	4.2%	11.25%
From 1 October 2026	4.35%	11.4%
From 1 October 2027	4.5%	11.55%

Separately, the weekly earnings threshold for the lower employer PRSI rate rises from €552 to €600 from 1 January 2027, which should keep a few more lower-paid roles inside the cheaper employer rate band. For a business running its own payroll, these increases are small per employee but add up quickly once you have a handful of staff, so it is worth modelling the cumulative cost across 2026 and 2027 rather than reacting to each change individually. A bookkeeper or payroll provider should be able to build both rate changes into your forecasts now rather than waiting for them to land.

Income Tax and USC Changes for 2027

The standard rate income tax bands widen by €2,500 across the board. The single person band rises to €46,500, the band for a single person qualifying for the Single Person Child Carer Credit rises to €50,500, and the band for married couples or civil partners on one income rises to €55,500 (also €55,500 for couples with two incomes, subject to a maximum increase of €37,500).

A number of tax credits increase too: the single person tax credit rises to €2,125, the married/civil partner credit to €4,250, the Employee PAYE Credit to €2,125, the Earned Income Tax Credit to €2,125, and the maximum Home Carer Tax Credit to €2,050. The rent tax credit also increases, to €1,150 for a single person and €2,300 for a married couple or civil partners.

On USC, the entry point stays the same (the 0.5% rate still applies to the first €12,012), but the 2% band widens by €1,600 to €18,288, which keeps most minimum wage earners inside the lower USC rates even as the Minimum Wage itself rises. The 3% band narrows correspondingly to €39,744, and the 8% rate on the balance is unchanged. If you run payroll in-house, these are exactly the kind of changes that are easy to miss until a client or employee queries their first payslip of the new tax year, which is where keeping on top of your broader financial goals and payroll calendar pays off.

R&D Tax Credit Enhancements

The R&D tax credit rate itself is unchanged at 35%, the rate set in Budget 2026, but several of the mechanics around it have improved for claimants. The limit on outsourcing R&D work to universities, institutes of higher education and unconnected third parties rises from 15% (or €100,000) to the greater of 20% of qualifying expenditure or €200,000, giving smaller companies more room to bring in outside expertise without losing credit value.

The first-year payment threshold, the amount of a claim that can be paid out in full in year one rather than spread over three years, rises from €87,500 to €105,000. A proposed 5% uplift on qualifying R&D wage costs has also been flagged, though the detailed rules are expected in the Finance Bill rather than confirmed on Budget Day. For a business doing genuine product development, these changes are worth discussing with your accountant before your next claim, particularly if outsourced research has previously pushed you against the old limits.

Corporation Tax and Preliminary Tax for Small Companies

The most useful change here for smaller companies is an administrative one. The threshold for qualifying as a “small company” under the preliminary corporation tax rules rises from €200,000 to €350,000 of prior-period tax liability, which brings a meaningfully larger group of companies into the simpler preliminary tax regime.

Under the proposed approach, a company that pays at least 80% of its current-year corporation tax liability by the final preliminary tax instalment date satisfies its obligation, with the balance due within four months of its year end, and the old 45% deeming provision is removed. Keeping your general ledger and management accounts current throughout the year makes this 80% estimate far easier to get right, since you are working from real numbers rather than a guess made months in advance.

Two further extensions are worth flagging: start-up company relief, which gives new companies tax relief in their first years of trading, is extended by four years to 31 December 2030, and the Knowledge Development Box, which offers a reduced rate on income from qualifying intellectual property, is extended to 1 January 2032. Anyone currently setting up a startup should check whether they fall inside the extended relief window.

Minimum Wage and Payroll Reporting

The National Minimum Wage rises by €0.79 to €14.94 an hour from 1 January 2027. Combined with the PRSI increases above, this is the clearest direct cost increase for any business with hourly-paid staff, and it is worth running through your staffing budget now rather than after the new rate takes effect.

Enhanced Reporting Requirements, the real-time reporting obligations that cover certain non-taxable employer payments, are also being revisited, with changes expected in the Finance Bill. Employers will apparently be able to choose between continuing to report in real time or reporting by the 14th of the month following the one in which the benefit was provided, which gives smaller employers without automated payroll systems a bit more breathing room. A review of the Cycle to Work and Travel Pass schemes is also planned for 2027. Businesses already leaning on automated accounting processes will find these reporting changes far easier to absorb than those still tracking benefits manually, which is one more argument for getting payroll software properly set up before the new rules land.

Capital Acquisitions Tax Changes

Capital Acquisitions Tax (CAT), the tax on gifts and inheritances, also saw its thresholds rise for gifts and inheritances received on or after 7 October 2026. The Group A threshold (broadly, parent to child) rises from €400,000 to €420,000, the Group B threshold (close relatives) rises from €40,000 to €44,000, and the Group C threshold (everyone else) rises from €20,000 to €22,000.

This matters for family businesses more than most people realise. If you are planning to pass shares in the company, or the business premises, to the next generation, these thresholds affect how much can move tax-free before CAT applies, and a hired accountant who understands succession planning can help structure the transfer to make the most of the higher limits.

New Supports for Investment and Enterprise

Away from the core tax measures, the Budget included several enterprise-focused announcements. The Department of Enterprise, Tourism and Employment is being allocated €1.4 billion for 2027, part of which includes €3 million for Enterprise Ireland to launch Startup Ireland, a new founder support initiative, alongside continued funding for the Growth and Sustainability Loan Scheme that many SMEs already use for SME funding.

On the investment side, the exit tax on Irish-domiciled funds, certain life assurance products and qualifying offshore funds and ETFs falls from 38% to 35%, and a new Irish Investment Account is planned from 1 July 2027, with a 1% flat annual tax above a €50,000 threshold and a €12,000 maximum annual contribution. For founders exploring wider funding and grant options alongside these new investment vehicles, it is worth getting independent advice before committing, since the detailed rules for the new account are still to be finalised.

What This Means for Your Business

Pulled together, Budget 2027 is less about one single headline change and more about a long list of smaller adjustments that each nudge a different part of running a business. A sensible way to work through it:

• Rebuild your payroll cost forecast to reflect both the October 2026 and October 2027 PRSI increases, plus the January 2027 Minimum Wage rise.
• If you are planning a disposal of shares, property or the business itself, get advice on whether delaying (or bringing forward) the sale around 7 October 2026 changes your tax position.
• Check whether your company now qualifies for the simpler small-company preliminary tax rules under the new €350,000 threshold.
• Revisit any R&D claim that was previously capped by the old outsourcing or first-year payment limits.
• If succession or a family transfer is on the horizon, factor the higher CAT thresholds into the planning.

Running these numbers properly often benefits from a bit of AI-assisted forecasting to model a few scenarios quickly, especially when a business is trying to weigh up the combined effect of PRSI, Minimum Wage and tax band changes all landing within the same twelve months. More broadly, this Budget is one more example of how quickly technology is changing finance and accounting work, since the firms already using good software are the ones who can absorb a list of changes like this without a scramble every January and October.

Quick FAQ

Question	Answer
When did Budget 2027 take effect?	It was delivered on 6 October 2026. Most tax measures apply from 7 October 2026 or from 1 January 2027, with a second PRSI increase from 1 October 2027.
Did the VAT rate change in Budget 2027?	No general VAT rate change was announced. If you need a refresher on current VAT rates and thresholds, see our full VAT in Ireland guide.
Is the corporation tax rate changing?	No change to the headline corporation tax rate was announced. The main change for smaller companies is the higher preliminary tax threshold.
Do these changes definitely become law as announced?	Not automatically. Several measures, including the R&D wage cost uplift and the preliminary tax mechanics, are described as subject to the Finance Bill, so the final legislation should be checked once published.
Who is most affected by the PRSI increase?	Any employer with staff on payroll, since both the employee and employer rates rise. Employers with several minimum wage staff feel it most, between the PRSI increase and the Minimum Wage rise.

Conclusion

Budget 2027 does not reinvent how small businesses in Ireland are taxed, but it adjusts enough individual pieces, PRSI, income tax bands, CGT, CAT, the R&D credit and preliminary tax rules, that very few businesses will be entirely unaffected. The practical next step is simple: work through each measure above against your own numbers rather than relying on headlines, since the real cost or benefit almost always comes down to the specifics of your payroll, your shareholding, or your claim history.

If you would like help translating any of this into what it actually means for your accounts, hire an accountant through Experlu, or read our guide on what hiring an accountant in Ireland typically costs before you commit. You can also get started with a conversation about your specific situation, visit our about us page to learn more about how we work, or get in touch directly with any questions on how Budget 2027 affects your business.