Budget 2027 contains a number of measures that will be of particular interest to private clients, business owners and farming families. As anticipated in advance of Budget Day, the Government has increased the CAT thresholds, providing additional tax-free capacity for gifts and inheritances across all three CAT groups. The Budget also includes a reduction in the standard CGT rate from 33% to 31%, together with a package of income tax and USC changes, a number of housing-related measures, the introduction of a new Investment Account and changes to the taxation of investment funds.
The following summary highlights the principal tax measures likely to be relevant to private clients.
CAT Thresholds
As part of Budget 2027, Minister for Finance Simon Harris confirmed increases to all three CAT thresholds, marking the first adjustments since Budget 2025.
- The Group (a) threshold, which primarily applies to gifts and inheritances received by children from their parents, will increase from €400,000 to €420,000, representing a €20,000 increase.
- The Group (b) threshold, which generally applies to siblings, nieces, nephews and grandchildren, will increase from €40,000 to €44,000.
- The Group (c) threshold, applicable to more distant relatives and unrelated individuals, will rise from €20,000 to €22,000.
The increased Group thresholds will apply to gifts and inheritances taken on or after 07 October 2026. The standard CAT rate of 33% remains unchanged.
CGT Rate
Budget 2027 introduced a significant change to Capital Gains Tax, with the Government announcing a reduction in the standard CGT rate from 33% to 31%.
The reduction will benefit individuals and businesses disposing of chargeable assets, including investment properties, shares and other assets subject to the standard CGT rate. There will be no change to the 33% rate which applies to the disposal of development land in Section 649A TCA 97.
Employment Taxes
Income Tax
The Minister for Finance Simon Harris announced that the Standard Rate Cut Off Point is increasing by €2,500 to €46,500 with proportionate increases for married couples and civil partners.
The Personal, Employee and Earned Income Credits are also increasing by €125 each.
The Home Carer Tax credit is increasing by €100.
USC
Minister Harris also announced that the entry threshold for the USC 3% band is also increasing by €1,600, from €28,700 to €30,300.
PRSI
For 2027, the Minister for Social Protection will increase the employer PRSI threshold from €552 to €600 per week. Minister Harris noted that this is “to support SMEs and ease the PRSI impact on employers from an increase in the National Minimum Wage.”
Cycle to Work & TaxSaver
Minister Harris noted that a review of the Cycle to Work scheme will be revisited in 2027 to determine ways to boost uptake among all workers.
In addition, the Minister for Transport will initiate a comprehensive review of the TaxSaver scheme for commuters. Minister Harris went on to note that “working patterns have changed and the scheme should reflect that.”
He concluded that if a satisfactory model can be developed, similar tax relief to the current scheme will apply.
Property
Rent Tax Credit
The Rent Tax Credit is being increased from €1,000 to €1,150 for a single claimant, and from €2,000 to €2,300 for a couple.
Rent-a-Room Relief
The tax-free threshold for this relief is increasing from €14,000 to €16,000. The relief is also being extended to certain detached auxiliary dwellings between 32 and 45 square metres installed after 27 July 2026.
Help to Buy
The maximum level of refund a first-time buyer can claim is being increased from €30,000 to €35,000 with immediate effect.
RZLT
The opportunity for landowners to avail of an exemption from RZLT is being extended into 2027 where an application is made to rezone land to reflect the genuine economic activity being carried out. Such applications will be considered by the relevant Local Authority.
Derelict Property Tax
The introduction of Derelict Property Tax was announced in last year’s Budget to replace the Local Authorities’ Derelict Sites Levy and will be legislated for in the upcoming Finance Bill. Local authorities will begin identifying and registering derelict properties in January and preliminary registers of dereliction will be published on 01 September 2027. The rate of tax will be 7% and Revenue will use its full range of powers to ensure high rates of compliance.
Savings & Investments
Irish Investment Account
Earlier this year, the Government announced plans for a new Irish Investment Account. The Minister confirmed that the account provisions will take effect on 01 July 2027 and will be legislated for in the Finance Bill. The account is intended to make investing simpler and more accessible for retail investors.
The new account will provide for a tax-free threshold of €50,000, a 1% annual tax on the value of the account above that threshold, and a maximum contribution limit of €12,000 per annum, with no minimum contribution requirement.
Investments held within the account will not be subject to CGT, Dividend Withholding Tax, Investment Undertaking Tax or Life Assurance Exit Tax, and the deemed disposal rules will not apply. Investors will be able to hold shares, bonds, ETFs and other funds within the account.
Investment Funds
The tax rate applying to Irish and equivalent offshore investment funds and life assurance products will be reduced from 38% to 35%. This follows the reduction in the rate from 41% to 38% introduced in Budget 2026 and reflects the Government's stated objective of encouraging greater participation in capital markets and supporting long-term investment.
Pensions
The Standard Fund Threshold (SFT) regime limits the value of pension benefits that may be accumulated without triggering an additional tax charge. For certain pension benefits, age-related valuation factors are used to convert an annual pension entitlement into a capital value for the purposes of measuring benefits against the SFT. The factors generally vary depending on an individual's age when benefits are taken.
Budget 2027 provides for a revision of these valuation factors from 01 January 2027. While the detailed changes have not yet been published, the revised factors may affect how particular pension benefits are valued against the SFT. Further details are expected in the Finance Bill. The Budget documents confirm that these changes relate to the valuation of defined benefit pension entitlements for SFT purposes.
Agriculture
Budget 2027 introduces a number of measures of interest to the farming sector, with a particular focus on farm succession and investment in farm safety.
Succession Farm Partnerships
The rules for Succession Farm Partnerships are being amended to remove the three-year holding period for applications made from 01 January 2027. In addition, the associated tax credit will increase from €5,000 to €10,000 per annum for five years for Succession Farm Partnerships registered on or after 01 January 2027. These changes should provide greater flexibility for farming families considering the transfer of the farm to the next generation.
Wear and Tear Allowance for Farm Safety Equipment
The Budget also extends the accelerated Wear and Tear Allowance for Farm Safety Equipment for a further three years to 31 December 2029, with a further 12 items being added to the existing range of qualifying equipment. Farmers investing in eligible safety equipment should therefore consider the availability of accelerated capital allowances when planning expenditure.
VAT Rates
Other measures announced include a reduction in the VAT rate on respiratory vaccines for livestock from 23% to 9% and an increase in the Farmers Flat Rate Addition from 4.5% to 4.8% in 2027, intended to provide full compensation for flat-rate farmers in respect of their VAT input costs. The Government also indicated that it will consider taxation, succession and acquisition and disposal measures for fishing and aquaculture businesses following recommendations from the Food Vision 2030 Seafood Group.
Corporation Tax
The Minister recognised that an unprecedented level of corporation tax has been collected in recent years and that these increases need to be invested. He referred to continuing heavy investment in physical infrastructure with transformative and “once-in-a-generation” projects. He also referred to the need to guard against the downturns that may come and continue to capitalise the Future Ireland Fund to meet demographic changes.
Research & Development
The R&D tax credit was introduced in 2004 to support scientific and technological research. Some improvements to the regime have been announced, including the following:
- Increasing the limits for subcontracting to third level institutions and third parties from 15% to 20%, and from €100,000 to €200,000,
- Increasing the first-year payment threshold from €87,500 to €105,000,
- Enhancing the treatment of qualifying R&D wage costs,
- Providing that if a clinical trial is regulated, this fact may be used to satisfy the science test to recognise R&D work undertaken by Irish companies as part of global trials,
- Providing for a simplification measure to allow for the R&D tax credit when calculating preliminary tax.
Knowledge Development Box (KDB)
The KDB rules provide for a lower rate of tax on profits generated from qualifying Intellectual Property by allowing a 20% deduction of qualifying profits, resulting in an effective corporation tax rate of 10% (rather than the standard trading rate of 12.5%). The Minister is extending the Knowledge Development Box regime by a further 5 years but also making provision for claimant companies to opt out of the KDB regime.
Interest
The Minister announced that he would be simplifying the existing interest relief provisions for borrowings taken out for certain lending and investment activities.
Changes to Preliminary Corporation Tax
The preliminary corporation tax rules are to be amended to improve flexibility and reduce administration. The small company threshold for preliminary tax payments is being increased from €200,000 to €350,000. The preliminary tax requirement will now be satisfied if 80% of the current year liability is paid by the final preliminary tax instalment date and the payment is topped up to 100% within 4 months of the end of the accounting period. The 45% deeming provision relating to underpayments of preliminary tax is being removed.
OECD Pillar Two “Side-by-Side” Package
The OECD Inclusive Framework agreed the Pillar Two Side-by-Side Package (applying to large multinational enterprise (MNE) groups with annual consolidated revenues of €750m or more) in January 2026. The Minister advised that he will be publishing legislation to implement the changes in the Finance Bill.
Investments in Corporate Trades & Angel Investor Relief
The tax reliefs for investment in small and medium enterprises carrying on corporate trades consist of the Employment Investment Incentive (EII), Start-Up Capital Incentive (SCI), and the Start-Up Relief for Entrepreneurs (SURE). In addition there is an Angel Investor Relief targeted at encouraging investment in innovative start-ups. These reliefs are State Aid and the Minister intends to extend the reliefs subject to the adoption of the new GBER planned for the end of 2026.
Conclusion
Budget 2027 includes a number of noteworthy changes for private clients, with measures affecting wealth transfers, capital disposals and investment activity.
Some of the measures announced on Budget Day are already effective under the Financial Resolutions, while others will take effect from 01 January 2027 or from later commencement dates specified in the legislation.
As is often the case, Budget Day announcements represent only the first stage in the legislative process. Further detail on a number of the measures announced is expected in Finance (No. 2) Bill 2026 and experience suggests that additional amendments and entirely new measures may emerge during the Finance Bill process. Taxpayers should continue to monitor developments and review their affairs as the legislation progresses through the Oireachtas.
Caveat: These notes are intended as a general guide to Budget 2027. OHT has endeavoured to provide an accurate commentary but the notes cannot cover all circumstances and OHT strongly recommends that formal tax advice be obtained before any steps are taken that may have a tax effect.
