Turning Policy into Progress, Our Take on Budget 2026

ciaranbrodigan
Oct 14
3 min read

Updated: Oct 15

This year’s Budget sends a clear message. Ireland is investing in long-term strength.

While the main focus is on housing, cost-of-living supports and infrastructure, the real story sits in the tax measures. Budget 2026 balances stability with strategic incentives, encouraging business investment and keeping key industries competitive.

VAT on New Apartments, Effective Immediately

In a move that caught many by surprise, the VAT rate on new apartment sales has been reduced from 13.5% to 9%, effective from midnight, the 7^th of October.

The change applies to completed new apartments and will remain in place until 31 December 2030. It aims to make apartment projects more viable, boost supply in urban areas and attract new investment into the housing market.

Developers and purchasers should take note. Review pricing, check that qualifying conditions are met and assess any cash flow impacts for current or planned projects.

Hospitality VAT Reduction

From 1 July 2026, VAT on restaurants, cafés, catering services and hairdressing will drop from 13.5% to 9%.

This does not apply to hotel accommodation, which will stay at its current rate. The Government’s goal is to support a labour-heavy sector that continues to face high wage and energy costs.

Businesses in these industries should plan ahead, updating systems and pricing to prepare for the change.

Entrepreneurial Relief, More Room to Grow

Budget 2026 brings a welcome update to the Capital Gains Tax Entrepreneurial Relief.

From 1 January 2026, the lifetime limit for the 10% reduced CGT rate will rise from €1.0 million to €1.5 million.

This gives business owners, founders and family enterprises more flexibility when planning exits, sales or succession. It also signals continued support for entrepreneurship and long-term business growth.

Budget 2026 - Contact us info@uhyfdw.ie — Our Directors, Alan and Thomas, at the Credit Union Budget Breakfast.

R&D and Innovation Incentives

Ireland continues to reward innovation. Budget 2026 strengthens supports for companies that invest in R&D and expansion.

The R&D Tax Credit increases from 30% to 35% from 1 January 2026.
The first-year payment threshold rises from €75,000 to €87,500, improving early cashflow for claimants.
Simplified rules for foreign dividend and double-tax relief aim to make cross-border operations smoother.

These changes reaffirm Ireland’s position as a leading innovation hub. Strong documentation and preparation will be key for companies planning to claim.

Corporate and Employment Measures

There are no major changes to the headline corporate tax rate, but several important updates will affect employers and internationally active firms:

KEEP (Key Employee Engagement Programme) extended to 2028
SARP (Special Assignee Relief Programme) renewed with simpler conditions
Exit tax rate on fund distributions reduced from 41% to 38%
National Minimum Wage increasing to €14.15 per hour from 1 January 2026
2% USC band ceiling increasing to €28,700, offering modest relief for lower earners

Together, these measures aim to make Ireland more attractive for talent, investment and growth.

A Budget Built on Stability

Budget 2026 is steady and deliberate. Rather than big new spending packages, the focus is on targeted support for enterprise, housing and key domestic industries.

The approach is measured, but intentional: stimulate development, protect households and maintain a stable tax environment that supports business confidence.

Our Thoughts

For Irish businesses, Budget 2026 is about opportunity and preparation. Developers, entrepreneurs and employers all have something to gain by acting early and planning carefully.

At UHY Farrelly Dawe White, we help our clients turn these updates into real results. Our tax and advisory teams work with you to understand how each measure applies to your business, identify where you can save, and build a strategy that keeps you ahead of change.

Whether you are reviewing VAT on property sales, assessing your eligibility for R&D credits, planning a business sale under the new CGT limit, or simply looking for clarity around compliance, we will help you make informed, confident decisions that drive growth.

Our approach is practical, proactive and always personal. Because we know that behind every policy update is a business, a team, and a vision for the future.

Download our Budget 2026 Guide or visit our Budget Hub for clear, simplified insights on everything announced in this year’s Budget.

Talk to our team today to find out how we can help you make Budget 2026 work for you.

There may be further changes in the Finance Bill later this month, so ensure to keep an eye out for further updates from our team.