Budget 2027 for businesses: R&D, preliminary tax and reliefs

Budget 2027 raises the R&D first-year payment to €105,000, eases preliminary corporation tax, cuts Capital Gains Tax to 31% and extends start-up reliefs.

Budget 2027 was presented on 6 October 2026. The tax measures below are in the Department of Finance's Tax Policy Changes document. They take effect when Finance (No. 2) Bill 2026 is enacted, from the dates it sets.

R&D tax credit

• first-year payment threshold up from €87,500 to €105,000
• sub-contracting limits for universities and unconnected third parties up from 15% or €100,000 to 20% or €200,000
• a new 5% uplift to the qualifying cost base by reference to R&D wage costs, for companies with enough qualifying spend
• better recognition of the credit when working out preliminary corporation tax
• regulated clinical trials can be used to meet the science test, to be added at Committee Stage

Preliminary corporation tax

• the "small company" limit, based on last year's tax, rises from €200,000 to €350,000, so more companies can pay preliminary tax in one instalment
• paying at least 80% of this year's tax by the final instalment date will be enough. A top-up to 100% must follow within four months of the year end
• the 45% deeming rule for an underpaid first instalment is removed

Reliefs extended

• start-up company relief (section 486C) to 31 December 2030: relief in full where corporation tax is under €40,000, with marginal relief up to €60,000
• the Knowledge Development Box to 1 January 2032, with a limited option for existing claimants to opt out
• the Employment Investment Incentive, the Start-Up Capital Incentive, Start-up Relief for Entrepreneurs and Angel Investor Relief. This is subject to the new EU General Block Exemption Regulation due from 1 January 2027

Other changes

• Capital Gains Tax falls from 33% to 31% for disposals from 7 October 2026; development land stays at 33%
• employer PRSI's higher-rate threshold rises from €552 to €600 a week for 2027, as the minimum wage rises to €14.94
• Professional Services Withholding Tax will move to personalised deduction rates instead of a flat 20%, subject to a commencement order
• non-oral respiratory vaccines for livestock move to 9% VAT

Work it out

• Corporation tax for your company →
• R&D tax credit →
• Capital Gains Tax on property →

Sources

• Department of Finance: Budget 2027: Tax Policy Changes (checked 25/10/2026)
• Citizens Information: Budget 2027 (checked 25/10/2026)
• Revenue: Tax and Duty Manual Part 29-02-03: R&D corporation tax credit (30% / 35%, instalments of €75,000 / €87,500) (checked 24/10/2026)
• Revenue: Preliminary Corporation Tax (small companies: €200,000; 90% / 100% rules) (checked 25/10/2026)
• Revenue: Tax and Duty Manual Part 15-03-03: tax relief for new start-up companies (s.486C) (checked 24/10/2026)

General information, not tax advice. HeyPenny is not a tax agent.