Budget 2027 Ireland: Key Changes for Company Directors & Construction Businesses

The key tax, payroll and business measures announced in Budget 2027 and what they could mean for Irish companies and construction businesses.

Ireland’s Budget 2027 was announced on 6 October 2026, with a number of measures affecting businesses, company directors, employers and employees.

For Irish company directors and construction businesses, some of the most relevant announcements include the reduction in the standard Capital Gains Tax rate, changes to preliminary Corporation Tax, enhancements to the R&D Tax Credit, changes to employer PRSI and the increase in the National Minimum Wage.

Not all measures take effect at the same time. Some will also require legislation through the Finance Bill before they become law. Businesses should therefore consider the announced measures alongside the final legislation and Revenue guidance. 

What Are the Main Budget 2027 Changes for Businesses?

Some of the measures most relevant to Irish businesses include:

These measures affect businesses differently depending on their structure, activities and workforce. 

What Does Budget 2027 Mean for Irish Company Directors?

Company directors should pay particular attention to changes affecting business taxation, capital disposals, payroll and tax planning.

The reduction in the standard CGT rate may be particularly relevant to directors considering the sale of shares or other assets. Other measures, such as changes to preliminary Corporation Tax and the R&D Tax Credit, may affect companies’ tax planning and cash flow.

The Budget also extends several investment and start-up incentives, subject to the relevant conditions and legislation. 

Capital Gains Tax Falls From 33% to 31%

One of the most significant tax announcements for business owners is the reduction in the standard Capital Gains Tax rate from 33% to 31%.

The new rate applies to disposals made on or after 7 October 2026.

However, the reduction does not apply to every type of chargeable gain. Revenue has confirmed that gains from the disposal of development land within the relevant provisions will continue to be subject to the 33% rate.

For company directors and business owners considering a disposal, the timing of a transaction may therefore be important.

The CGT implications of a business sale or asset disposal can depend on the type of asset, ownership structure and available reliefs. Professional advice should be obtained before making decisions based solely on the headline rate change.

What Does Budget 2027 Mean for Corporation Tax?

Budget 2027 proposes changes to the preliminary Corporation Tax regime.

The threshold used to determine whether a company is a small company for preliminary tax purposes will increase from €200,000 to €350,000.

The preliminary tax rules will also be made more flexible. Companies will be able to satisfy their preliminary tax obligation where at least 80% of the current-year Corporation Tax liability has been paid by the final preliminary tax instalment date, with the balance required to bring the payment to 100% paid within four months of the accounting period end, subject to the detailed rules. 

This could give qualifying companies greater flexibility when managing Corporation Tax payments and business cash flow.

It does not, however, remove the need for companies to plan for their Corporation Tax liabilities and meet the applicable deadlines.

R&D Tax Credit Changes

Budget 2027 also introduces several enhancements to Ireland’s R&D Tax Credit regime.

The limits for qualifying R&D expenditure outsourced to third-level institutions and unconnected third parties will increase. The new limits will be the greater of 20% of qualifying in-house R&D expenditure or €200,000.

The first-year payment threshold will also increase from €87,500 to €105,000. This means qualifying companies with smaller R&D claims may receive a greater proportion of the credit earlier.

Other proposed changes include improved recognition of the R&D Tax Credit when calculating preliminary Corporation Tax and a new provision allowing companies to increase their qualifying cost base by 5% of qualifying R&D wage costs, subject to conditions. Regulated clinical trials may also be able to satisfy the science test for R&D purposes. 

Companies considering an R&D claim should review the detailed conditions before assuming expenditure qualifies.

What Does Budget 2027 Mean for Construction Businesses?

Construction businesses should consider Budget 2027 alongside the employment and tax rules that already apply specifically to the construction sector.

The National Minimum Wage will increase to €14.94 per hour from 1 January 2027. However, this is not necessarily the applicable minimum rate for every construction worker.

Businesses covered by the Construction Sector Sectoral Employment Order must also consider the relevant statutory construction pay rates and worker classifications. These can be higher than the National Minimum Wage depending on the employee’s role and classification.

Construction employers should therefore review both the general National Minimum Wage and the applicable construction-sector rates when budgeting for 2027.

Employer PRSI and Payroll Changes

Budget 2027 also contains changes relevant to employers.

The weekly earnings threshold for the lower employer PRSI rate will increase from €552 to €600 in 2027. The change is intended to help offset some of the additional employment costs associated with the increase in the National Minimum Wage. 

Employers should review their payroll costs ahead of 2027, particularly where employees are earning at or close to the minimum wage.

Changes to Enhanced Reporting Requirements

From 1 January 2027, employers will have an option to report certain employee payments under Enhanced Reporting Requirements either in real time or on a monthly basis, subject to the detailed rules.

For employers already operating ERR processes, this provides an opportunity to review whether their payroll and reporting procedures remain the most efficient approach. 

What About RCT and VAT for Construction Businesses?

Budget 2027 does not change the existing RCT rates.

Relevant Contracts Tax continues to apply to certain payments made by principal contractors to subcontractors in the construction, forestry and meat-processing industries. The current RCT rates are 0%, 20% and 35%. 

Construction businesses should also continue to consider the VAT treatment of their contracts. Construction services can have different VAT treatment depending on the nature of the work and whether RCT applies. For relevant construction services between principal contractors and subcontractors, the VAT reverse charge can apply. 

The Budget therefore should not be viewed in isolation. Construction businesses need to consider the new measures alongside their existing RCT, VAT, payroll and accounting obligations.

What Should Company Directors Do Now?

Budget announcements do not necessarily mean that every business needs to make immediate changes.

Company directors should consider:

• Reviewing planned disposals in light of the CGT rate reduction.
• Reviewing Corporation Tax and preliminary tax payments.
• Assessing whether the company could benefit from the enhanced R&D Tax Credit rules.
• Reviewing payroll budgets for 2027.
• Checking employee pay against the applicable statutory minimum rates.
• Construction businesses should review both National Minimum Wage and construction-specific pay rates.
• Reviewing RCT and VAT compliance processes.
• Considering whether the new ERR reporting options could simplify payroll administration.
• Waiting for the detailed Finance Bill legislation before relying on measures that have not yet been enacted.

The Finance Bill will provide the detailed legislative provisions needed to implement the Budget measures. 

Need Advice on How Budget 2027 Affects Your Business?

Budget changes can have different implications depending on your company structure, tax position and industry. If you’re unsure how the announced measures could affect your business, Richard OShea Consultancy can provide tailored tax and business advice.

Final Thoughts

Budget 2027 contains several changes that Irish company directors and construction businesses should review when planning for 2027.

The reduction in the standard CGT rate, changes to preliminary Corporation Tax, R&D enhancements, the higher National Minimum Wage and changes to employer PRSI could all have practical implications for businesses.

For construction companies, the Budget should also be considered alongside existing RCT, VAT, payroll and sector-specific employment requirements.

As the Finance Bill is introduced and further Revenue guidance becomes available, businesses should review the final rules before making significant tax or financial decisions.

Disclaimer: This article is intended for informational purposes only and should not be considered a replacement for professional advice. The author(s) disclaim any liability for actions taken or not taken based on the content of this document. It is recommended to seek tailored advice before making any decisions related to the topics discussed in this article. 

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