Budget 2027: private client tax

Capital Gains Tax

The standard rate of Capital Gains Tax (CGT) reduced from 33% to 31% from midnight on 6 October 2026 and applies to disposals made on or after 7 October 2026. This is a welcome first step towards improving Ireland’s competitiveness and encouraging the productive recycling of capital. It is important, however, that taxpayers identify the date of disposal correctly, generally the date of the unconditional contract rather than completion, where a transaction straddles the change of rate.

The reduction does not extend to gains arising on disposals of development land, which remain subject to CGT at 33%. The distinction between development land and other assets will therefore become more significant, particularly where a disposal includes land with development value together with buildings or other non-development elements.

The lower standard rate also slightly reduces the value of the increase in the lifetime limit for Revised Entrepreneur Relief introduced for gains arising from 1 January 2026. The limit increased from €1 million to €1.5 million, with qualifying gains taxed at 10%. At a 33% standard rate, the additional €500,000 of qualifying capacity could produce a maximum further saving of €115,000. At the new 31% standard rate, that maximum further saving is €105,000. Accordingly, the Budget 2027 CGT rate reduction will reduce the incremental benefit of the €500,000 higher threshold announced in Budget 2026 by €10,000, although the combined effect remains materially favourable for qualifying entrepreneurs.

Savings and Investment Account

The new Savings and Investment Account is expected to be available from 1 July 2027 to Irish tax-resident individuals aged 18 or over who hold a PPSN, with one account permitted per person. There will be no minimum contribution, while annual contributions will be capped at €12,000. The first €50,000 of account value will fall within a tax-free threshold; a flat annual charge of 1% will apply to the value above that threshold, irrespective of the income or gains actually generated in the account.

Eligible assets are expected to include listed shares, listed bonds, instruments traded on regulated markets and suitable retail investment funds, including ETFs. Derivatives, crypto-assets and other highly complex or risky products are not expected to qualify. There will be no minimum holding or lock-in period, and the policy intention is to facilitate tax-neutral transfers between participating providers where possible.

From a compliance perspective, the account should be considerably simpler for individual investors than the existing investment tax regime. The provider, rather than the account holder, is expected to calculate the annual charge, report the relevant information and pay the tax to Revenue. The existing fund and investment rules, including the eight-year deemed disposal regime, should not apply to qualifying investments held within the account. The legislation will nevertheless need to clarify valuation dates, withdrawals and re-contributions, transfers, provider fees, losses, death and emigration, and the treatment of assets that cease to qualify. Further details will be set out in Finance (No. 2) Bill 2026.

Offshore funds and other investments

From 1 January 2027, the tax rate applying to individuals on income and gains from Irish investment undertakings, equivalent offshore funds and domestic and certain foreign life assurance policies will reduce from 38% to 35%. This will cover many Irish- and EU-domiciled ETFs that fall within the investment-undertaking regime. The reduction is welcome and increases the proportion of an investment return retained by investors, while bringing the headline rate for affected funds and policies closer to the new 31% standard CGT rate. A four-percentage-point differential nevertheless remains, and the regimes are not directly comparable: the funds and life assurance charge can apply to income as well as gains, generally without the benefit of the CGT annual exemption or ordinary loss-offset rules.

The existing eight-year deemed disposal regime will continue to apply outside the new Savings and Investment Account. Investors may therefore face a tax charge on an unrealised gain and an associated record-keeping burden even where no investment has been sold. Budget 2027 also announced that the legislation governing retail investment taxation will be simplified, with a particular focus on clarifying the treatment of ETFs. The Government will continue its wider review of the rate, the deemed disposal rule and the administrative burden on retail investors. These commitments are important, as investment outcomes can still depend heavily on the legal form, domicile and tax classification of the chosen product. The detailed legislation and subsequent reform timetable will determine whether the package delivers a genuinely simpler and more neutral framework for investing.

Capital Acquisitions Tax

The increases in the CAT tax-free thresholds from 7 October 2026 are welcome but modest. The Group A threshold increases to €420,000, the Group B threshold to €44,000 and the Group C threshold to €22,000, while the rate remains at 33%. The increases provide some relief, but thresholds have not kept pace with the substantial growth in residential property, business and other asset values over time.

A broader review of the CAT system is now warranted. The legislation should better reflect modern family structures and provide appropriately targeted rules for vulnerable beneficiaries and trusts established to meet their long-term needs. Any reform should consider whether the current relationship-based threshold categories remain fit for purpose, whether reliefs operate consistently across differing family circumstances, and whether the compliance burden is proportionate.

There is also a wider policy question as to how CAT fits within the overall tax system. Although CAT is imposed on the beneficiary rather than the donor’s estate, gifts and inheritances are commonly funded from assets accumulated out of income or gains on which tax has already been paid. The objective of promoting fairness and equality of opportunity therefore needs to be balanced against the impact on family succession, business continuity and the transfer of assets between generations.

Income tax measures 

Income tax and USC

The €2,500 increase in the standard-rate income tax band, together with €125 increases in the personal, PAYE and earned income credits and the widening of the 3% USC band, will provide targeted relief from 2027. These measures are relevant to employees, the self-employed and business owners, but should be viewed against continuing increases in PRSI and the broader cost environment.

Property-related measures 

Derelict Property Tax

A new Revenue-administered tax will apply to residential and non-residential properties identified as derelict by local authorities, at 7% of the property’s self-assessed value. It will be phased in, initially covering towns and cities with populations of at least 4,000 from 2027; preliminary registers are due on 1 September 2027, final registers on 1 March 2028, and the first filing and payment deadline on 23 June 2028. Remediation, demolition and clearance, or a sale followed by action to address the dereliction may take a property outside the charge, with limited deferral where remediation is under way. 

Rent-a-Room relief

The relief limit increases from €14,000 to €16,000 from 1 January 2027. The relief is also being extended to qualifying “Designated Auxiliary Dwellings” installed after 27 July 2026. This will allow qualifying detached accommodation within the garden or curtilage of an individual’s principal private residence—such as an eligible garden home—to come within the scheme, rather than requiring the accommodation to form part of or be attached to the main dwelling. The €16,000 limit will apply to the homeowner’s total qualifying receipts under the relief, rather than separately to each unit. 

The extension should help bring additional accommodation into use, although the detailed statutory conditions for a qualifying auxiliary dwelling will need to be considered. These measures offer targeted support and seek to bring vacant or underused property into productive use, but they do not substitute for the longer-term need to address housing supply and affordability; the scheduled expiry of the mortgage interest tax credit also means that the overall impact will vary materially by household.

Help to Buy

The maximum refund available under the Help to Buy scheme increases by €5,000, from €30,000 to €35,000, for qualifying claims from 7 October 2026. Relief remains the lesser of the €35,000 maximum, 10% of the purchase price or approved valuation, and the Income Tax and DIRT paid in the previous four years. The other principal conditions are unchanged, including the €500,000 maximum property value, the requirement for a qualifying new build or self-build, and the minimum 70% loan-to-value ratio. 

Rent Tax Credit

This credit increases by €150 to €1,150 for an individual and by €300 to €2,300 for a jointly assessed couple for the 2027 and 2028 tax years. 

Other measures

Other measures of relevance to private clients include a €100 increase in the Home Carer Tax Credit, the increase in the income-tax exemption for qualifying childcare services provided in the home from €15,000 to €20,000, and a two-year extension of VRT relief for electric vehicles. The Budget also provides for a €10 weekly increase in most social welfare payments and pensions, higher income disregards for Carer’s Allowance from July 2027, and increases in the Working Family Payment thresholds, Fuel Allowance and Living Alone Allowance. While individually less significant from a tax-planning perspective, these measures form part of the wider package of targeted support for families, carers, pensioners and households.

Get in touch if you have any queries you might have in relation to Budget 2027.