Published: October 2025
Author: Amergin Consulting Ltd.
Target Audience: SME Owners, HR Managers, Finance Directors
Book a meeting: https://calendly.com/amergin-group_free/30min
Irish small and medium-sized enterprises (SMEs) face a pivotal Q4 2025 planning window as Budget 2026 Ireland ushers in major regulatory and cost changes from January 2026.
Mandatory pension Auto-Enrolment will require all employers to enroll eligible workers into a state pension scheme, adding new payroll costs. The minimum wage rises to €14.15/hour (≈5% increase), and carbon taxes continue to climb — all of which will squeeze margins.
At the same time, the Government is rolling out targeted reliefs — from the enhanced R&D tax credit (up to 35%) and new green investment tax reliefs, to digitalisation grants and SME support funds — that savvy businesses can leverage for growth.
Q4 2025 is therefore critical for business owners, finance leaders, and HR teams to update payroll systems, budget for new costs, and capitalise on available incentives before 2026.
Companies that plan now can turn Budget 2026 into an opportunity. Those that delay risk compliance penalties, financial strain, and missed funding.
Schedule a free Budget 2026 Planning Consultation with Amergin Consulting to navigate these changes with expert guidance.
| Measure | What It Means | Financial Impact |
|---|---|---|
| Minimum Wage Increase | Rise of €0.65 to €14.15/hr (≈5%) from Jan 2026 | Increases payroll costs; no offsetting income tax cuts |
| Auto-Enrolment Pension Scheme | Employers must enroll workers (age 23–60, income >€20k) in MyFutureFund | 1.5% employer + 1.5% employee + 0.5% State; fines up to €50k for non-compliance |
| R&D Tax Credit Boost | Increased from 30% to 35%; refund cap €87,500 | More cash for R&D-intensive SMEs |
| VAT & Sectoral Reliefs | Hospitality VAT at 9% (from 13.5%) from July 2026; 9% VAT on new apartments | Relief for hospitality and housing sectors |
| Green & Sustainability Incentives | Carbon tax to €71/t; EV reliefs and accelerated capital allowances extended | Tax-efficient sustainability investments |
| SME Support Funds | €1.3bn in enterprise funding, new Small Business Unit, Digitalisation Grants | Streamlined supports for growth and digital transformation |
Ireland’s new Auto-Enrolment Pension Scheme is one of the most consequential Budget 2026 changes. From 1 January 2026, every employer must automatically enroll eligible employees in the State-run MyFutureFund pension system.
This mandate applies to all employers, regardless of size — even startups. If you employ anyone aged 23–60 earning over €20,000, they must be enrolled. Employees already in an approved private pension can be exempt.
Contributions start at:
Employer: 1.5% of gross salary
Employee: 1.5% of gross salary
State: 0.5% top-up
Rates will gradually increase to 6% each by 2035.
A small firm with €500,000 payroll → €7,500 in new employer pension costs in 2026.
A mid-sized firm with 15 staff earning €45,000 each → €10,125 in 2026, doubling to over €20,000 by 2031.
Compliance is mandatory: non-compliance can incur fines up to €50,000 and even criminal liability. It’s illegal to discourage staff from participating.
Employer registration opens in Q4 2025 under the new National Automatic Enrolment Retirement Savings Authority (NAERSA). SMEs must prepare now:
Identify eligible staff
Budget for contributions
Update payroll software for automatic deductions
Prepare employee communications
If your firm already offers a pension scheme, confirm whether it qualifies for exemption. If not, you’ll need to transition to MyFutureFund or adjust accordingly.
Amergin Tip: Set up payroll integration early. Auto-enrolment will be complex — our Payroll Advisory team can implement compliant systems and staff briefings to avoid last-minute disruption.
Beyond pensions, Budget 2026 increases the minimum wage to €14.15/hour (+€0.65). For small businesses, that’s nearly a 5% payroll cost rise from January.
This increase — the largest in years — will heavily impact retail, hospitality, and low-margin sectors. A café with 10 minimum-wage employees could see its annual wage bill rise by €100,000.
With no income tax cuts or USC reductions, employees won’t see higher take-home pay. This means further wage pressures across all pay grades, as staff negotiate raises to maintain purchasing power.
Other cost factors to budget for:
Statutory Sick Pay: expands to 10 paid days per year in 2026.
Employer PRSI: no rate hike announced, but still payable on new pension contributions.
Overtime/Holiday Pay: minimum wage increase cascades into premium rates.
Fuel & Energy: carbon tax hikes will increase transport and heating costs.
Action Steps:
Reforecast 2026 payroll costs now.
Adjust pay scales and budgets.
Consider efficiency or automation to offset rising labour expenses.
Use non-cash retention tools (KEEP, bonuses, equity) to manage expectations.
While costs are rising, Budget 2026 strengthens several tax incentives that SMEs can harness for funding innovation and growth.
Qualifying R&D expenditure credit up from 30% to 35%.
Refundable portion cap increased to €87,500 (was €75k).
Applicable across software, manufacturing, and engineering innovation.
Example: A company spending €250,000 on R&D can now receive an €87,500 refund — a €12,500 cashflow boost over prior rules.
The 32% Digital Games Tax Credit continues through 2031, with broader eligibility for post-launch content development.
The Accelerated Capital Allowance (ACA) for energy-efficient equipment extends to 2030. Firms can claim 100% first-year write-offs for green investments like solar panels, efficient machinery, and EV fleets.
SME corporation tax rate remains 12.5%.
Entrepreneur Relief limit rises from €1m → €1.5m, keeping 10% CGT rate on qualifying disposals.
KEEP scheme (tax-efficient share options) extended through 2028 — helping SMEs attract and retain skilled staff.
Foreign Earnings Deduction expanded and SARP extended, supporting export and relocation talent strategies.
SMEs should review all eligible credits and reliefs with their accountants or a CFO advisor before December. Many incentives can be combined (R&D, ACA, KEEP) if structured properly.
Digital transformation remains a key Government focus for 2026, with increased Enterprise Ireland and Local Enterprise Office funding.
€1.3bn allocated to enterprise support agencies.
Launch of a Small Business Unit and National Enterprise Hub to simplify grant access.
Continuation of Digital Start, Online Trading Voucher, and Digitalisation Voucher schemes (up to €9,000).
Ireland begins the phased rollout of mandatory e-invoicing in line with EU VAT reform. SMEs must ensure accounting systems can issue structured electronic invoices (PEPPOL format) by 2026.
Budget funding supports national cybersecurity — SMEs should invest in tools and training to safeguard digital operations. Skillnet and ETB training programmes in AI, automation, and digital marketing may also receive additional funding.
Action:
Audit your digital readiness.
Upgrade accounting and payroll software.
Apply early for digital transformation grants.
Train staff in tech and cybersecurity essentials.
Budget 2026 balances climate costs with sustainability incentives.
Rises to €71/tonne CO₂ in 2026 (from €68).
Increases fuel and heating costs — diesel up ~2c per litre; full impact by May 2026.
€5,000 VRT rebate for EVs extended through 2026.
€10,000 BIK exemption for company EVs retained.
Accelerated Capital Allowances (ACA) extended to 2030 for energy-efficient assets.
Immediate full deduction in year one for qualifying equipment (listed by SEAI).
9% VAT on new apartments (to 2030) and expanded Living City Initiative encourage construction and retrofitting.
Agri-sector: 4-year extension of accelerated allowances for slurry storage and green infrastructure.
SMEs should identify one or two “green wins” for 2026—EVs, solar installations, or energy-efficient machinery—and leverage both ACA tax savings and SEAI grants.
Hit hardest by wage hikes and pension costs.
Benefit from VAT cut to 9% (July 2026).
Plan price adjustments, shift scheduling, and staff communication early.
Labour and fuel costs up, but strong pipeline ahead: €5bn housing budget + 9% VAT on apartments.
Contractors should prepare bids early and review supply chain contracts to lock pricing.
Focus on auto-enrolment setup and compliance documentation.
Use KEEP and flexible incentives for retention.
Prepare for e-invoicing and new digital reporting requirements.
Leverage 35% R&D credit, extended KEEP, and Entrepreneur Relief for exits.
Plan equity and share option structures before year-end.
Review investor materials and financial forecasts to integrate new reliefs.
Offset carbon tax and wage increases with R&D and green equipment allowances.
Explore export diversification grants and Foreign Earnings Deduction.
Budget & Forecasting
Recalculate payroll and pension contributions.
Adjust pricing and staffing plans.
Model carbon and fuel cost increases.
Compliance Preparation
Register with NAERSA once open.
Update payroll systems for auto-enrolment.
Prepare employee communications and pension letters.
Review e-invoicing readiness and VAT settings.
Tax & Incentives
Review R&D, KEEP, and ACA eligibility.
Identify qualifying capital investments for early deduction.
Time share option grants or corporate transactions strategically.
Grants & Supports
Contact your Local Enterprise Office or Enterprise Ireland advisor now.
Prepare documentation for 2026 grant applications (quotes, project scopes).
Attend sector webinars for Budget-specific updates.
Staff Communication
Explain auto-enrolment, new payslip changes, and benefit updates.
Reinforce company strategy to maintain morale amid cost increases.
Budget 2026 marks a turning point for Irish SMEs — bringing both new obligations and new opportunities. The coming year will test how well businesses manage compliance, control costs, and leverage supports to fund growth.
Firms that act in Q4 2025 — upgrading payroll, budgeting for auto-enrolment, and aligning with new incentives — will enter 2026 strong, compliant, and competitive. Those that wait risk fines, lost cashflow, and missed opportunities.
Amergin Consulting helps Irish SMEs navigate these shifts with clarity. Our CFO, Payroll, and Tax Advisory teams integrate compliance with strategy — turning regulation into advantage.
Schedule a free Consultation: https://calendly.com/amergin-group_free/30min
This article provides general guidance and does not constitute financial or legal advice. Budget 2026 measures (including Auto-Enrolment, tax reliefs, and labour laws) may be subject to revision under the Finance Act 2025. Business owners should consult qualified professionals before taking action.
Donohoe, P. – Budget 2026 Statement (Dept. of Finance)
ThinkBusiness.ie – Budget 2026: Key Points for Business Owner
Irish Times – R&D tax credit in Budget to rise from 30% to 35%
Reuters – Expansionary Irish 2026 budget targets investment
Amergin Consulting – Auto-Enrolment Guide for SME
Amergin Consulting – Outsourced CFO Blog (Quick Facts section)