Budget 2026: Small Wins for Investors and SMEs
Budget 2026: Small Wins for Investors and SMEs
Budget 2026 was presented by Minister for Finance Paschal Donohoe & Minister for Public Expenditure Jack Chambers today. As anticipated, there were no real surprises and the budget focused mainly on public spending and infrastructure.
While we were hoping for more, there were some key proposals made in areas such as Exit Tax and Entrepreneur Relief, offering some respite to retail investors and small to medium businesses.
Exit Tax: Gains For Investors, Gaps in Reform
Unio was pleased to see the rate of exit tax on Irish-domiciled investment funds and life products reduced from 41% to 38%. We believe that this should ultimately be brought in line with the standard rate of Capital Gains Tax of 33% levied on the likes of share and property sales.
However, we were disappointed not to see the end of deemed disposal for Irish-domiciled investment funds and life products. This rule taxes gains made every eight years, even if the investor has not sold their holding and realised the gains. There was also no reduction to the 1% Government Levy applied to investment funds.
Harmonisation of the rate and removal of deemed disposal were recommended in the Fund Sector 2030 report, which was published in late 2024. We hope to see these recommendations implemented in full following the issue of an Implementation Plan for the Fund Sector 2030, due later today (07/10/2025), as we believe they would encourage greater participation in investment in Ireland, particularly from retail investors.
Bigger Breaks for Business Owners
Entrepreneur Relief is a valuable relief which reduces the rate of Capital Gains Tax charged on the first €1m of gains made in their lifetime on the disposal of their business from 33% to 10%. This lifetime limit is being increased to €1.5m from the 1st of January 2026, which will result in business owners potentially saving up to €115,000 on the disposal of their business.
Additionally, VAT on food & catering and hairdressing businesses will be reduced from 13.5% to 9% from the 1st of July 2026.
Other Points to Note
As forecast, there were minimal changes with regards to personal tax bands or thresholds. There was a small increase to the 2% USC band, up to €28,700 from 01/01/2026.
It was confirmed that the State Pension rate will increase by €10 per week. It was also announced that a bonus double payment will again apply for Christmas.
The Student Contribution Charge has been permanently revised to €2,500 per year, per student.
Implementation of Changes from Budget 2025
Some key changes that were announced in Budget 2025 are due to be implemented from 1st January 2026, including:
- The Standard Fund Threshold is being increased to €2.2m and is due to increase further over the following years. Read more: Bigger Pension Caps Ahead | Unio News and Insights
-Auto-Enrolment (AE) is being introduced in January 2026. This will see any employee aged between 23-60, earning more than €20,000 p.a., automatically enrolled in the My Future Fund pension scheme Contributions to My Future Fund will be made by the employee and employer and then be topped up by the government. Read more: Understanding Auto Enrolment | Unio News and Insights
What do these changes mean for you?
For a full understanding of the potential changes and the impact they will have on financial planning for your future, contact your client manager directly or get in touch at enquiries@unio.ie.