Budget 2027

Budget 2027 brings personal tax savings, a lower standard Capital Gains Tax rate and changes aimed at reducing business administration. There are also announcements affecting property, investment and farm succession. Here are the key points for businesses, the self-employed and their families:

Employers

Minimum Wage

Minimum Wage will be increased to €14.94 per hour. 

Employer PRSI

To ease the impact of the minimum wage the Employer PRSI threshold has been increased from €552 to €600. 

The minister indicated this may represent a saving to businesses on Employers PRSI of between €650-€700 per employee below the new threshold. However, the exact saving will depend on employee specific pay. 

Reporting expenses and benefits

From January 2027, employers are to be offered the choice of making monthly Enhanced Reporting Requirements returns or continuing with real-time reporting. 

These requirements cover specified tax-free travel and subsistence payments, small benefits and remote-working allowances. Until the change takes effect, continue reporting on or before the payment date.

Capital Gains Tax (CGT) 

The Minister announced a reduction in the standard CGT rate from 33% to 31%.

It will apply to disposals made on or after October 7th.

By way of an example, €100,000 of gains taxable at the standard rate, after losses, exemptions and reliefs, would attract CGT of €31,000 rather than €33,000, a saving of €2,000 once the new rate applies.

The new 31% rate, will not apply to sales of development land, which will continue to be taxed at 33%.

Income Tax 

Middle income earners have received a welcome boost to their take home pay. 

The Standard Rate Cut Off Point has been increased by €2,500 with proportionate increases for married couples and civil partners.

The Standard Rate Cut Off Point is the maximum amount of income that is taxed at the lower income tax rate i.e., 20%. Any income you earn above this point is taxed at the higher rate, which is 40%.

There has also been an increase in main tax credits, the Personal, Employee and Earned Income Credits, by €125.

As such, if you take a married couple, running their family company, with two incomes earning €100,000 a year between them, the result here is tax savings of €1,500 a year. 

The minister also announced an increase in the entry threshold for the USC 3% band by €1,600 from €28,700 to €30,300 (this increase is to take account of the minimum wage changes). 

Saving and planning for the future

Gifts and inheritances

The following Capital Acquisitions Tax threshold increases were announced:

By way of an example, for a gift/inheritance within the Group A threshold, the potential tax saving is €6,600 (being €20,000 increase x 33%). 

Group A includes a beneficiary who is a child of the disponer (the individual providing the gift/inheritance).
Group B includes a beneficiary who is a brother or sister of the disponer. 
Group C applies where the beneficiary has no close familial relationship with the disponer.

New Irish Investment Account  

The proposed account is due to open on 1 July 2027. Its announced design includes:

• A €50,000 tax-free account-value threshold.
• An annual tax of 1% on the value above that threshold.
• A maximum annual contribution of €12,000, with no minimum.
• Crucially, there will be no requirement for people to engage with Revenue when it comes to the normal administration of the account. That responsibility will fall to the provider.

For example, an account valued at €52,000 would attract annual account tax of €20 (being €2,000 × 1%). 

The account is intended to sit outside specified existing CGT, dividend withholding, fund and life assurance exit-tax rules, with no deemed disposal for investments held inside it. Full operating conditions will follow in legislation.

Funds 

For those who invest in Irish and equivalent offshore funds as well as Irish and foreign life assurance products, there had been much discussion about the deemed disposal rule (whereby even if you don’t sell your investment, you are treated for tax purposes as though you sold it every eight years). This rule was not removed. However, the tax rate was reduced from 38% to 35%.

Property and family costs 

Rent Tax Credit

The maximum Rent Tax Credit is set to increase to €1,150 for a single claimant and €2,300 for a qualifying jointly assessed couple.

Rent-A-Room Relief

The annual limit is set to increase from €14,000 to €16,000. The Minister also announced an extension to newly installed Detached Auxiliary Dwellings, retrospective to July 2026.

Remember, exceeding the applicable limit removes the relief, it does not simply make the excess taxable. 

Help to Buy

The Minister announced an immediate increase in the maximum Help to Buy refund from €30,000 to €35,000, from 6 October 2026. This is a maximum, not a guaranteed refund for every first-time buyer. 

Land and derelict property

Another opportunity for a Residential Zoned Land Tax exemption in 2027 was announced for landowners seeking rezoning to reflect genuine economic activity. The exemption will be considered by Local Authorities.

Derelict Property Tax

Legislation for the new Derelict Property Tax is to be included in the Finance Bill, with a proposed rate of 7%. Preliminary registers are due on 1 September 2027. 

Of note was the reference to Revenue using its full range of powers to ensure high rates of compliance.

Childminders and education

The Childcare Services Relief limit is set to increase from €15,000 to €20,000, with removal of the child-number limit within the tax relief. This is a targeted relief for qualifying home-based childminding, not a general tax-free allowance for childcare businesses.

The amount excluded when calculating Income Tax relief for third-level fees is to be aligned with the Student Contribution rate. The revised amount and full application details were not given.

Research and Development (R&D) 

The Minister announced the following proposed R&D changes in his speech:

• An increase in the first-year payment threshold from €87,500 to €105,000.
• Higher subcontracting limits, increasing the percentage limit from 15% to 20%, and the monetary limit from €100,000 to €200,000.
• An enhancement for qualifying R&D wage costs (calculation details still to follow).
• A provision with a view on reducing administrative burden, whereby if a clinical trial is regulated, this fact may be used to satisfy the science test.
• Recognition of R&D credits for preliminary tax purposes.

Agriculture 

For Succession Farm Partnerships, the Minister announced removal of the three-year holding period for applications made from 1 January 2027 onwards.

For partnerships registered from that date, the annual succession tax credit is to increase from €5,000 to €10,000 for five years, subject to the scheme’s conditions.

Other announcements include:

• Extending accelerated allowances for farm safety equipment to 31 December 2029, with 12 additional items.
• Reducing VAT on respiratory vaccines for livestock from 23% to 9%.
• Increasing the Farmers’ Flat Rate Addition from 4.5% to 4.8% in 2027.

Start-up and investment reliefs   

Extensions (subject to State Aid Approval) were announced for:

• Employment Investment Incentive
• Start-Up Capital Incentive
• Start-Up Relief for Entrepreneurs, and
• Angel Investor Relief. 

The small company corporation tax start-up relief is also to be extended.

The revised expiry dates were not given in the Minister’s speech.

Preliminary Corporation Tax 

The Minister plans to increase the threshold for treatment as a small company for preliminary corporation tax alongside other simplifications. The new figure and commencement details were not specified.

Professional Services Withholding Tax (PSWT)

Personalised deduction rates are proposed to replace the flat 20% PSWT deduction. The change will require a commencement order following stakeholder engagement. As such, it is not an immediate change to payment procedures.