Budget 2027: Ambitious and optimistic - balancing today's needs with tomorrow's musts.
Our Budget 2027 hub provides insights and analysis to help you understand the changes, and assess the Budget's potential impact on your financial planning and business strategy.
For personalised support or to discuss specific aspects, our experts are available to help you have the clarity to act, the confidence to move forward and the opportunity to grow with purpose.
Key comments
This was positioned as a personal tax Budget, and there will be some positive impact for people’s pockets in the changes to various thresholds. In the run up to Budget 2027 there was much less focus on the business aspect, but there were some welcome measures here that made this one of the most business-friendly Budgets we have seen in some time. We would be sceptical as to whether the measures go far enough to live up to the Tánaiste's rhetoric about repaying risk.
The Budget includes positive developments for families and those engaged in succession planning, but the reality is that continued inflation will erode a substantial portion of the benefits from the changes to inheritance tax. The thresholds have increased modestly across all categories which will provide additional scope for tax-efficient transfers of wealth, but the continued growth in asset values does mean inheritance tax will remain a headache for many families.
The €275 billion National Development Plan is what has the big engineering firms interested. Today’s €20.3 billion capital budget is next year’s instalment of it. MetroLink was cleared for tender last month at a central estimate of €15.75 billion, our water infrastructure has €12.2 billion to 2030, and the grid has €3.5 billion in new equity for ESB Networks and EirGrid. International players commit to a series of projects of that size on a predictable timetable and we are making good progress in this regard, but we do need to start thinking about what is coming beyond the existing pipeline, as former Taoiseach Leo Varadkar has said in recent days. Extensions of the Metrolink via additional spurs should be considered.
The changes to Employer's PRSI will be helpful for small businesses but in general it's hard to see this Budget as a major improvement for this cohort in their day-to-day trading. Hospitality got a major measure in July, when VAT went back to 9 per cent, and hospitality failures are now down on last year. Today's fund for rural pubs will also help. But other sectors like retail are still struggling, as energy costs and measures like auto-enrolment increase their cost base. There is nothing in this Budget that tells me we will avoid the usual increase in insolvencies that tends to come in Q4 of the year. Businesses should watch their cashflow, and not hesitate to seek advice if they think their viability may be in question.
A notable aspect of Budget 2027 is the Government's commitment to a more strategic approach to medicines and health technology access. Patient access and competitiveness are increasingly two sides of the same coin. A healthcare system that can evaluate, adopt and reimburse innovative medicines and technologies more effectively delivers better outcomes for patients while also sending a powerful signal to investors, innovators and multinational companies that Ireland is serious about innovation.
The Pharma and Life Sciences sector has remained strong in Ireland, despite a number of years of tariff-related headlines. That's a reassuring sign that the competitive proposition in Ireland is delivering for these firms. The sector continues to seek measures to improve this competitiveness further. These included bringing advanced process innovation inside the R&D credit, lifting the caps on outsourced research and funding clinical trials infrastructure. Today moves on outsourced research but little on the others. Something to bear in mind is that these firms operate round-the-clock plants at a time when energy costs have been rising substantially, so there may be a case for supports in this area in future Budgets.
The State is sitting on a National Training Fund surplus collected from employers to prepare the workforce for the future, and today we saw the announcement of a €150m fund to help with AI upskilling, which is a good first step. This is essential investment in Ireland’s ability and reputation as location for harnessing the best of emerging technologies. Based on what we’re hearing from clients, a good deal more investment will be required to complement the funds already being invested by the private sector.Â
Taxation of share-based pay was under review and is left untouched. Our firm view is reform is needed here to bring Ireland more in to line with other jurisdictions.
The R&D tax credit remains at 35% following in an increase to the rate in last year's budget, but Budget 2027 introduces a number of targeted enhancements aimed at improving access and cashflow for claimants. The existing limits on subcontracted R&D expenditure have been increased, with the cap for work outsourced to third-level institutions rising from 15% to 20% of qualifying expenditure and the limit for third-party subcontracting increasing from €100,000 to €200,000. For claimants, the practical issue remains the cost of compliance, since Revenue audits of R&D claims are now routine and the time and professional fees involved reduce the net benefit of the credit.
Budget 2027 includes some welcome simplification for companies in terms of their preliminary tax requirements, both by reducing the number of companies which are subject to onerous large company payment rules and also by reducing the interest exposure where those rules are not satisfied in full.
The 9% rate has done what it was meant to do, and the Government should say so. Since July, food-led hospitality has had the breathing space it asked for, with no sunset clause. But at a cost of about €681 million a year, the relief should be measured against what it was for – jobs and prices, rather than margins. On the evidence available so far, the insolvency figures suggest it is working and keeping business open.
On the whole the new PIA looks like a fantastic opportunity for those looking for better returns from the investment markets over the medium to long term to do so without being harshly punished when their investments do well. The opportunity for younger investors to start small and build up to the 50k without CGT is very positive and l would expect those looking to build deposits, to consider this as a viable option. Â Couples can also split their investments, thereby being able to have 100k exempt of tax. As always larger investments will exceed these levels, so we would always recommend consulting a financial advisor before making any decision.
For employees, Budget 2027 should generally deliver an increase in net pay through the expansion of the 20% income tax band, higher personal tax credits and the widening of the 2% USC band. For employers, the most significant cost measure is the increase in the National Minimum Wage to €14.94 per hour. The cumulative impact of PRSI increases, auto-enrolment pension obligations and ongoing wage growth continues to place upward pressure on employment costs. As a result, many employers are likely to be disappointed that the overall cost of employment continues to rise despite measures designed to support employee take-home pay.
