Budget summaries usually focus on how much someone will save on their personal tax bill. For self-employed people and company owners, the questions also involve cash flow, payroll costs, business reliefs and the timing of a sale or succession.
A sole trader will want to know what the new tax bands and credits mean against expected 2027 profits. A company director may be more interested in the Capital Gains Tax reduction, preliminary Corporation Tax changes or whether an R&D claim is now more useful. Employers also have minimum wage, PRSI and reporting changes to factor into next year’s costs.
APM Accountants’ view is that several measures deserve attention from owner-managers, particularly those affecting tax payment dates, reporting and business planning.
Some changes, including the new standard CGT rate and CAT thresholds, took effect from 7 October 2026. Others have been announced for future implementation or require Finance Bill legislation, so the effective dates and final rules need to be watched carefully.
What are the key changes for Irish business owners?
Budget 2027 increases the standard income tax band for a single person from €44,000 to €46,500. The Personal, Employee and Earned Income Tax Credits each rise by €125 to €2,125, while the upper limit of the 2% USC band moves from €28,700 to €30,300.
For company owners, several measures sit outside personal income tax. The standard Capital Gains Tax rate has fallen from 33% to 31% for disposals made on or after 7 October 2026. Changes have also been announced to preliminary Corporation Tax rules, the R&D tax credit and Enhanced Reporting Requirements.
Budget 2026 delivered some of the larger headline business incentives, including the increase in the R&D credit from 30% to 35% and the rise in the Revised Entrepreneur Relief lifetime limit from €1 million to €1.5 million for qualifying disposals from 1 January 2026. Budget 2027 builds on those measures in several areas rather than replacing them.
Income tax changes for the self-employed
For a self-employed person earning enough to use the full standard rate band, Budget 2027 provides a more noticeable income tax adjustment than Budget 2026, when the main income tax credits remained unchanged.
Take a single self-employed person with taxable earned income of €60,000, assuming they qualify for the full Personal Tax Credit and Earned Income Tax Credit.
Compared with 2026:
- the additional €2,500 taxed at 20% rather than 40% saves €500
- the Personal Tax Credit rises by €125
- the Earned Income Tax Credit rises by €125
- moving €1,600 from the 3% USC band into the 2% band saves €16
On those assumptions, the combined Income Tax and USC improvement is approximately €766 before PRSI and any other personal circumstances or reliefs are considered. The Personal Tax Credit does apply in addition to the Earned Income Tax Credit for a qualifying single self-employed person, so both €125 increases belong in this example. The Earned Income Credit is available on qualifying self-employed earned income, subject to Revenue’s rules.
Self-employed PRSI also changes during 2027, with the Class S rate scheduled to increase from 4.35% to 4.5% from October 2027. The eventual net benefit will therefore depend on income level and the individual’s wider tax position.
For somebody running their own business, the sensible calculation is based on expected profit rather than a generic Budget example. That is particularly useful when deciding how much cash to reserve for Preliminary Tax. Revenue’s existing self-assessment rules require Preliminary Tax to meet specified minimum levels based on current, previous or, in limited circumstances, pre-previous year liabilities.
CGT and planning a business sale
The standard Capital Gains Tax rate has reduced from 33% to 31% for disposals made on or after 7 October 2026. Development land remains subject to the 33% rate. Revenue has already updated its guidance to reflect the change.
On a taxable gain of €500,000 that is fully exposed to the standard rate, the two percentage point reduction represents €10,000 less CGT. On €1 million, the difference is €20,000.
For somebody selling a trading company, however, the standard rate is only part of the calculation.
Budget 2026 increased the lifetime qualifying gains limit for Revised Entrepreneur Relief from €1 million to €1.5 million, with qualifying gains potentially taxed at 10%. That increased limit applies to qualifying disposals from 1 January 2026.
The ownership history, trading status and structure of a sale can affect which reliefs are available. A director considering an exit should therefore establish whether Entrepreneur Relief or another relief applies before simply calculating the gain at 31%.
Timing also matters. Revenue has confirmed that gains subject to the standard rate arising on disposals up to 6 October 2026 remain taxable at 33%, while qualifying standard-rate disposals from 7 October use 31%. The existing CGT payment and filing dates have not changed.
Preliminary Corporation Tax and cash flow
The proposed changes to Preliminary Corporation Tax could be particularly relevant for profitable Irish SMEs that have grown beyond the existing small-company threshold.
Under current Revenue rules, a company is treated as a large company for Preliminary Corporation Tax purposes where its Corporation Tax liability for the previous accounting period exceeds €200,000. Small companies can generally base Preliminary Tax on 100% of the prior period liability or 90% of the current period liability, subject to the rules and top-up provisions.
Budget 2027 proposes increasing the small-company threshold from €200,000 to €350,000.
It also proposes a more flexible current-year approach, including an extended top-up mechanism where at least 80% of the liability is paid by the final preliminary tax date and the balance is brought to 100% within four months of the accounting period end. The 45% deeming provision for large companies is also due to be removed. These measures are Budget announcements and should be checked against the final Finance Bill legislation before companies change payment arrangements.
Consider a company with a previous Corporation Tax liability of €250,000. Under the current €200,000 threshold it falls into the large-company regime. If the proposed €350,000 threshold is enacted as announced, it could fall within the small-company category, assuming the other conditions are met.
The change could give eligible companies more flexibility over when they pay their tax, which should be reflected in their cash-flow forecasts.
For a business carrying a sizeable Corporation Tax liability, the timing of the payment can have a real effect on working capital even where the total tax ultimately payable does not change.
R&D tax credit changes
Budget 2026 increased the R&D Corporation Tax Credit from 30% to 35% and increased the first-year payment threshold from €75,000 to €87,500. Budget 2027 leaves the 35% rate in place but proposes several changes to how the relief operates.
The announced changes include:
- increasing outsourcing limits from the greater of 15% of qualifying in-house R&D expenditure or €100,000 to the greater of 20% or €200,000
- increasing the first-year payment threshold from €87,500 to €105,000
- improving recognition of the R&D credit when calculating Preliminary Corporation Tax
- allowing a proposed additional amount based on 5% of qualifying R&D wage costs, subject to the required level of qualifying expenditure
- changes around regulated clinical trials, with further legislative detail expected
Qualifying R&D can take place in engineering, software, manufacturing and food production businesses as well as in laboratories. Eligibility depends on the work undertaken and the technical uncertainty involved.
A manufacturer developing a new production process or a software company attempting to resolve a genuine technological uncertainty may have work worth examining. Routine product development, ordinary upgrades or commercial experimentation cannot simply be relabelled as R&D.
The higher outsourcing limits may be particularly relevant for smaller companies that use third-party specialists or third-level institutions rather than employing every technical capability internally.
Businesses considering a claim should wait for the final legislative detail where necessary and keep the technical and financial records needed to support the expenditure.
Enhanced Reporting Requirements
Budget 2027 also promises more flexibility around Enhanced Reporting Requirements, which cover specified non-taxable payments and benefits made to employees and directors.
The Government has announced that employers will be able to choose monthly reporting rather than reporting each relevant payment in real time. Importantly, the National Enterprise Hub states that this monthly option is due to apply from January 2028, not January 2027.
That date distinction matters for payroll planning.
For smaller employers, monthly reporting could remove some administration around travel and subsistence and other reportable benefits. The current obligations remain relevant in the meantime, and employers should not change their processes early on the assumption that the monthly system already applies.
The Department of Enterprise has described the ERR change as part of a broader effort to reduce administrative burdens following feedback from employers.
Minimum wage and employer PRSI
The National Minimum Wage will increase by 79 cent to €14.94 per hour from 1 January 2027. The weekly earnings threshold for the lower employer PRSI rate will rise from €552 to €600. The Government estimates that the PRSI threshold change will save employers approximately €650 to €700 per qualifying employee over a year.
Employers need to calculate the combined effect of the higher minimum wage and the revised PRSI threshold.
For businesses in hospitality, retail and other labour-intensive sectors, the payroll impact should be run through the 2027 budget rather than looking at either measure in isolation. A business with several staff clustered around the minimum wage may still see its overall wage bill increase despite the PRSI adjustment.
Pricing and staffing decisions should therefore be based on the full payroll cost, including employer PRSI, rather than the hourly wage alone.
Gifts, inheritances and business succession
Capital Acquisitions Tax remains at 33%, but the tax-free group thresholds increased for gifts and inheritances taken on or after 7 October 2026.
The thresholds are now:
- Group A: €420,000, up from €400,000
- Group B: €44,000, up from €40,000
- Group C: €22,000, up from €20,000
Revenue has updated its CAT guidance to reflect the new thresholds.
For a family company, the €20,000 increase in the Group A threshold is useful but should not be examined on its own.
Family businesses should review these measures alongside Business Relief, Retirement Relief, company valuations and the owners’ income needs. Property or investment assets sitting inside a company can also affect the planning, depending on the circumstances.
Succession planning normally works better when the tax consequences are considered alongside control of the company, future income for the existing owners and what the next generation actually intends to do with the business.
Start-up reliefs and investment incentives
Budget 2027 extends several existing enterprise and investment supports rather than introducing an entirely new set of tax incentives.
The measures announced include extensions to the Employment Investment Incentive, Start-Up Capital Incentive, Start-Up Relief for Entrepreneurs and Angel Investor Relief. The Small Company Start-Up Relief is also being extended.
The Government has separately allocated €3 million to establish Start Up Ireland and announced an expansion of the Growth and Sustainability Loan Scheme, with the wider scheme increasing to €1 billion and running to June 2029.
For an existing start-up, the practical question is still whether a particular relief fits the business and whether the qualifying conditions can be met.
Reliefs are only valuable when the company qualifies and the records support the claim.
What changed from Budget 2026 to Budget 2027?
| Area | Budget 2026 position | Budget 2027 change |
|---|---|---|
| Standard income tax band, single person | €44,000 | €46,500 |
| Personal Tax Credit | €2,000 | €2,125 |
| Earned Income Tax Credit | €2,000 | €2,125 |
| 2% USC band ceiling | €28,700 | €30,300 |
| Standard CGT | 33% | 31% from 7 October 2026 |
| Revised Entrepreneur Relief | Lifetime qualifying gains limit increased to €1.5m from 1 January 2026 | 10% relief rate and €1.5m lifetime limit retained |
| R&D credit | Rate increased from 30% to 35%; first-year threshold €87,500 | Outsourcing limits and first-year threshold increased, plus other proposed enhancements |
| Small-company Preliminary CT threshold | €200,000 | Proposed increase to €350,000 |
| Enhanced Reporting Requirements | Current reporting regime | Monthly option announced from January 2028 |
| Employer PRSI lower-rate threshold | €552 weekly | €600 weekly for 2027 |
| Group A CAT threshold | €400,000 | €420,000 from 7 October 2026 |
The comparison shows that Budget 2026 delivered some of the larger headline business incentives, particularly the R&D rate increase and the higher Entrepreneur Relief lifetime limit. Budget 2027 adds personal tax relief, reduces the standard CGT rate and proposes changes to tax payment and reporting rules that may improve cash flow or administration for some businesses.
What should self-employed people review before 2027?
A self-employed person should start with expected 2027 profit rather than last year’s tax bill.
Review the likely Income Tax, USC and PRSI position, then compare that with the Preliminary Tax already being set aside. Revenue’s rules permit different bases for satisfying Preliminary Tax, but underpaying can lead to interest, so the figure should not simply be carried forward without checking it.
It is also worth reviewing:
- pension funding
- whether all allowable business expenses are being recorded
- planned capital expenditure
- cash reserves for Income Tax, VAT and other Revenue liabilities
- whether continued self-employment or incorporation remains the appropriate structure as profits change
Incorporation should not be driven by a tax rate comparison alone. How much income the owner needs personally, pension plans, administrative costs, retained profits and longer-term plans for the business all come into the decision.
What should company owners review before 2027?
For directors and owner-managed companies, the main Budget 2027 points can be reduced to a fairly practical list:
- Preliminary Corporation Tax: check whether the proposed €350,000 small-company threshold would change the company’s payment regime.
- Business disposals: rerun the CGT calculation for any planned sale and check whether Revised Entrepreneur Relief or another relief may apply.
- R&D: review genuine technical development work, particularly where specialist work is outsourced.
- Payroll: build the €14.94 minimum wage and revised employer PRSI threshold into the 2027 wage budget.
- ERR: keep the present reporting process in place and prepare for the announced monthly option from January 2028.
- Succession: review the new CAT thresholds alongside the other reliefs and the ownership structure of the business.
Salary, dividends, pension contributions, director loan accounts, Corporation Tax and personal tax should still be reviewed together where relevant. Changing one part of an owner-manager’s remuneration can affect another part of the tax position.
What should happen next?
If you are planning a business sale, succession, R&D claim or a change in how you take income from your company, review the figures before committing. The same applies where the preliminary tax changes or payroll measures could materially affect cash flow.
APM Accountants, Dublin Accountants, Auditors and Tax Advisors based in Tallaght, Dublin 24, can help assess the tax position, payment dates and records needed.
