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Budget 2027 Highlights

Budget 2027 sets out several tax measures focused on small and medium sized businesses and their owners. The increase in the tax credit available for expenditure on research and development and the extension of key business reliefs for are welcome developments.

A reduction from 38% to 35% for income and gains generated from Irish and offshore funds has been announced, along with a reduction in the standard CGT rate from 33% to 31%. Hopefully this trend will continue, and we will see these rates align.

Should you have any taxation or business questions, our experienced team will be happy to share their insights with you.

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Personal Taxation

  • Standard rate band increased by €2,500, giving a tax saving of €500 for higher rate taxpayers.

  • Personal, Employee and Earned Income tax credits increase by €125 each, giving a saving of €250 for most taxpayers.

  • Increase in the 2% USC threshold from €28,700 to €30,300.

  • Introduction of a new Investment Account from 1 July 2027, with annual contributions capped at €12,000. The first €50,000 will be tax free, with a 1% annual tax on account value above the threshold.

  • Rent tax credit increases by €150 per person, resulting in a credit of €1,150 for single applicants or €2,300 for jointly assessed taxpayers.

  • Rent-a-Room scheme threshold is increased by €2,000 to €16,000.

  • Reduction in tax rate of funds and life assurance products from 38% to 35%.

  • CAT thresholds increase by €20,000 for Group A, €4,000 for Group B, and €2,000 for Group C.

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Business Taxation

  • Standard CGT rate reduced from 33% to 31% for disposals made on or after 7 October 2026, while development land remains at 33%.

  • Enhanced R&D Tax Credit Regime, with First-year repayment threshold increased from €87,500 to €105,000, and subcontracting limits increased.

  • Small company preliminary tax threshold increased from €200,000 to €350,000.

  • Extensions announced for key business reliefs, including Knowledge Development Box, Start-Up Relief for Companies, Employment Investment Incentive (EII), Start-Up Capital Incentive (SCI), Start-Up Relief for Entrepreneurs (SURE),and Angel Investor Relief.

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VAT & Other Tax Measures

  • Charities VAT Compensation Scheme fund increased by €5 million.

  • Additional opportunity for landowners to seek rezoning and possible exemption from RZLT for 2027.

  • New 7% annual tax on the value of residential and non-residential derelict properties.

  • Excise duty to increase by €1 on a packet of 20 cigarettes, e-liquid increases by 20 cent per ml.

  • New pool betting duty of 25% on commissions earned (with exemptions for on-course bets.

  • €5,000 VRT relief for electric vehicles extended until 31 December 2028, while VRT increases by 1% for more polluting vehicles in bands 3-20.

  • Increase in carbon tax on transport fuels deferred until 1 May 2027.

  • Reduced carbon tax rates for kerosene and natural gas maintained until 2030.

  • VAT Charity Compensation Scheme funding increased from €10 million to €15 million.

  • eWHT reforms to introduce personalised withholding rates.

  • Bank Levy extended to 2027.

  • Annual donations ceiling for heritage items increased from €8 million to €12 million.

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