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 changes from January 2026. New mandatory pension Auto-Enrolment 2026 will require all employers to enroll eligible workers in a state pension scheme, adding payroll costs. A minimum wage hike to €14.15/hour (≈5%) and rising carbon taxes will further squeeze marginsthinkbusiness.ie. At the same time, the government is rolling out targeted reliefs – from enhanced R&D tax credits (Ireland’s rate jumps to 35%)gov.ie and green investment tax relief measures, to digitalization grants and SME support funds – that savvy businesses can leverage for growth. Q4 2025 is critical for SME owners, finance directors, and HR managers to plan for SME payroll changes, update compliance systems, and capitalize on incentives before 2026. The stakes are high: companies that prepare now can turn Budget 2026 into an opportunity, while those that delay risk compliance penalties and financial strain. Schedule a free Budget 2026 planning consultation with our team (via Calendly) to navigate these changes with expert guidance.
Minimum Wage Increase: National minimum wage rising by €0.65 to €14.15 per hour from January 2026 (nearly a 5% increase)thinkbusiness.ie. No offsetting income tax cuts were introduced, which may fuel wage increase demandsthinkbusiness.ie.
Auto-Enrolment Pension Scheme: From 1 January 2026, all employers must auto-enroll employees aged 23–60 earning over €20,000 into the new MyFutureFund pension. Initial contributions are 1.5% of salary from employer + 1.5% from employee (with 0.5% State top-up), scaling to 6% each by 2035amerginconsulting.com. Non-compliance can incur fines up to €50,000amerginconsulting.com.
R&D Tax Credit Boost: R&D tax credits in Ireland increase from 30% to 35% of qualifying R&D spendgov.ie. The first-year payable credit refund cap rises to €87,500 (up from €75k) to spur small-firm innovationgov.ie. This means SMEs can reclaim more cash for development costs in 2026.
VAT and Sectoral Reliefs: VAT on hospitality returns to 9% (from 13.5%) effective July 2026thinkbusiness.iethinkbusiness.ie. A special VAT cut to 9% on new apartment sales runs from now through 2030 to boost constructionthinkbusiness.ie. Apartment construction costs also get an enhanced tax deduction to improve project viabilitygov.iegov.ie.
Green & Sustainability Incentives: Carbon tax increases to €71/tonne CO2 in 2026 (adding to auto fuel costs from Oct 2025 and other fuels by May 2026)gov.ie. To encourage a greener fleet, the €5,000 VRT relief for electric vehicles is extended through 2026gov.ie and benefit-in-kind (BIK) tax relief for company EVs remains €10,000 in 2026gov.ie. Accelerated capital allowances for energy-efficient equipment are extended to 2030, acting as a green investment tax relief by fast-tracking tax write-offs for sustainable assetsgov.ie.
SME Support Funds: €1.3 billion allocated to enterprise, including a new Small Business Unit and National Enterprise Hub to streamline grantsthinkbusiness.ie. A Start-up Ireland initiative will help new businesses access supports. The Digital Transformation Grants (Ireland) and innovation programs (e.g. extended Digital Games Tax Credit to 2031gov.ie) are part of a push for SME digitalization and competitiveness.
(Now let’s break down these changes – and why the last quarter of 2025 is a make-or-break period for SME planning.)
Ireland’s new Auto-Enrolment pension scheme is one of the most consequential changes for SMEs in Budget 2026. From 1 January 2026, every Irish employer must automatically enroll eligible employees into a state-run pension (MyFutureFund)amerginconsulting.com. This mandate applies regardless of company size – even startups and small firms cannot opt outamerginconsulting.comamerginconsulting.com. If you have employees aged 23–60 earning over €20,000, you will have to enroll them (employees already in a workplace pension can be excluded)amerginconsulting.com.
Initial contributions start at 1.5% of gross salary from employer and 1.5% from employee in 2026 (with the State adding 0.5%)amerginconsulting.com. While 1.5% may sound small, it represents a direct increase in payroll costs. For example, a small professional firm with €500,000 eligible payroll will pay an extra €7,500 in employer pension contributions in 2026. A mid-sized company with 15 staff averaging €45,000 salaries would contribute about €10,125 in 2026, doubling to over €20,000 by 2031 as rates rise to 3%, and reaching €40,500 by 2035 at the full 6% rateamerginconsulting.com. Businesses must budget for these escalating costs in long-term financial plans.
Compliance is critical: there is no grace period or exemption – penalties for non-compliance reach up to €50,000 plus potential jail timeamerginconsulting.com. The law (Automatic Enrolment Retirement Savings Act 2024) makes it a criminal offense to even encourage employees to opt out improperlyamerginconsulting.com. Beginning in Q4 2025, the new pension authority (NAERSA) opens employer registrationamerginconsulting.com. SMEs should use Q4 to identify all eligible employees, budget for contributions, and update payroll systems to handle automatic deductions and filings. Every payroll run from January onward must withhold and remit pension contributions, so payroll software and processes need upgrading now for Auto-Enrolment integrationamerginconsulting.com.
Practical tip: If you already offer a private pension scheme, confirm if it qualifies to exempt you from the state scheme. If not, you’ll need to enroll in the state MyFutureFund or adjust your scheme accordingly. Plan staff communications too – you’re legally required to inform employees about auto-enrolment and their opt-out rights (employees can opt out after 6 months, but you must still enroll them initially)amerginconsulting.com. Given the complexity and high stakes, many SMEs are consulting with financial advisors or outsourced payroll providers to ensure Auto-Enrolment compliance is in place (this is where seeking expert help can save time and avoid costly mistakes).
Beyond pensions, Budget 2026 brings significant payroll cost pressures that SMEs must account for in financial planning. The national minimum wage will increase to €14.15 per hour from January 2026, up €0.65 (4.8%) from the current ratethinkbusiness.ie. This bump – the largest in recent years – was recommended by the Low Pay Commission and adopted by Government to boost incomesthinkbusiness.ie. For small businesses in retail, hospitality, or other low-margin sectors, a 5% jump in base wages can shrink margins and cash flow. Industry groups like ISME have warned the increase is “unsustainable” for some SMEs and could risk jobsthinkbusiness.ie. For example, a café with 10 minimum-wage staff might see its annual wage bill rise by ~€100,000 solely from the higher wage floor. SMEs should model these increases now and explore efficiency measures or pricing adjustments to offset the impact by 2026.
Compounding matters, the Budget included no broad income tax cuts or USC reductions for 2026, meaning employees won’t see much extra net pay from tax changesthinkbusiness.ie. Unions predict this will fuel demands for higher gross wages across sectorsthinkbusiness.ie. In practical terms, even employees above minimum wage may press for raises to keep up with living costs, since take-home pay isn’t rising via tax relief. SME payroll planning for 2026 should therefore budget for potential pay bumps or bonuses to retain staff, especially in a tight labor market.
Other labor-related cost factors to watch:
Statutory Sick Pay: By 2026, Ireland’s legally required paid sick leave reaches its full phase-in (likely 10 days per year per employee). This effectively means higher contingent payroll costs for sick days, which SMEs need to fund. Ensure your 2025 Q4 budget review accounts for this, and that your outsourced payroll (Ireland) provider or internal team updates policies.
PRSI and Pensions: While Budget 2026 didn’t hike employer PRSI rates, the new auto-enrolment contributions (1.5%) act as an quasi-“Payroll tax” in effect. Also note that employers will contribute PRSI on the pension contributions as part of salary, which slightly increases the total cost (though employee pension contributions are not subject to PRSI or income tax for the employee).
Overtime/Holiday Pay: A higher minimum base also raises overtime rates, Sunday premiums, etc., under employment laws. Plan for these knock-on effects in sectors like retail, security, or healthcare which often have variable hours.
Energy & Fuel Costs: Another pressure comes from climate policy. The carbon tax increase to €71/ton of CO2 will gradually make heating, fuel, and transport more expensivegov.ie. From May 2026, gas, diesel, home heating oil and other fuels will reflect this higher carbon charge. For instance, diesel prices could rise by several cents per liter, affecting logistics and any business with vehicles or generators. If you’re in construction, agriculture, or delivery sectors, budget for fuel cost rises or consider investing in more fuel-efficient or electric vehicles (incentivized by the Budget’s EV measures – see Section 5).
Bottom line: SMEs should update their 2024–2026 financial projections for increased payroll costs. This includes recalculating gross-to-net pay runs at the higher minimum wage, estimating the new pension contributions (Section 1), and factoring in likely pay raises or bonuses to satisfy staff. Proactive steps like improving productivity, trimming non-essential expenses, or adjusting pricing in Q4 2025 can help absorb these costs. In some cases, outsourcing payroll or using automation may cut administrative overhead, ensuring compliance (for example, auto-enrolment calculations) while freeing internal resources to focus on cost-saving strategies. Consider talking to a financial advisor or CFO services for startups/SMEs to develop a sustainable payroll plan for 2026.
On the upside, Budget 2026 offers enhanced tax credits and reliefs that SMEs can use to offset costs and invest in growth. The headline change is the Research & Development (R&D) tax credit boost. Starting in 2026, businesses conducting qualifying R&D can claim 35% of their R&D spend as a tax credit, up from 30%gov.ie. This is a significant increase aimed at keeping Ireland attractive for innovation. Importantly, even if your company is not yet profitable (common for startups), you can get a portion of the credit refunded in cash. The first-year refund cap is now €87,500gov.ie, meaning an SME could potentially receive up to that amount in cash for R&D expenditures, providing a valuable cashflow injection. For example, a tech startup that spends €250,000 on R&D in 2026 could get a €87.5k refund up front (35% credit, with first €87.5k payable), compared to €75k under the old scheme – an extra €12.5k funding boost simply due to the Budget change.
This R&D enhancement isn’t just for tech – manufacturers, engineering firms, food producers, or any SME developing new or improved products, processes or software should revisit their R&D plans. The higher credit improves ROI on innovation spending. The Government will also release an “R&D Compass” with further tweaks (e.g. possibly making it easier to claim credit on outsourced R&D or expanding eligible costs)irishtimes.comirishtimes.com. SMEs should stay tuned to leverage these once detailed.
Other tax relief changes in Budget 2026 relevant to SMEs:
Digital Gaming Tax Credit – Extended until end of 2031, with scope broadened to cover post-launch development of game contentgov.ie. If you’re in digital media or interactive software, this provides up to 32% credit on qualifying game development costs for several more years.
Green Investment Incentives – While not a direct “green investment tax relief” in name, the Budget extended Accelerated Capital Allowances for energy-efficient equipment to 2030gov.ie. This means if your company invests in things like solar panels, efficient HVAC systems, or electric vehicles, you can write off that investment against taxable profit much faster (100% in year one for eligible assets). The effect is a lower tax bill, effectively subsidizing green upgrades. There’s also continued relief on corporate tax for certain farm/environmental investments (e.g. 4-year extension on accelerated allowances for slurry storage for agri SMEs)gov.ie.
Corporate Tax in Ireland 2026 – The headline corporation tax rate remains at 12.5% for SMEs, unchanged in Budget 2026thinkbusiness.ie. (Ireland’s 15% rate under OECD rules applies only to very large multinationals, so most SMEs continue at 12.5%.) This stability provides certainty for SME budgeting. However, the government highlighted the risks of Ireland’s corporate tax dependence (over half of receipts come from 10 big companies)thinkbusiness.ie. They are funneling surplus tax revenue into reserve funds, which signals that while tax rates are steady, compliance enforcement is likely to remain strict. SMEs should ensure full compliance with tax filings to avoid audits or penalties.
Entrepreneur Relief (Capital Gains Tax) – To encourage business investment and exits, Budget 2026 increased the lifetime limit on gains eligible for CGT Entrepreneur Relief from €1 million to €1.5 milliongov.ie. Under this relief, founders pay a reduced 10% CGT on qualifying business sale gains (versus 33% standard rate) up to that threshold. If you’re an SME owner considering selling the business or shares, this change could save up to €50,000 in tax. (E.g. selling a company for a €1.5m gain in 2026 would now incur ~€150k CGT instead of ~€330k, a substantial reduction.) It may influence succession planning – some owners might delay a sale until 2026 to use the higher limit.
Key Employee Engagement Programme (KEEP) – SME owners and startups often grant share options to key employees. The KEEP scheme, which allows stock options with tax advantages (no income tax on exercise if within limits), was due to expire in 2025. Budget 2026 extended KEEP to 2028gov.ie. This gives startups more runway to use share options for talent attraction/retention without immediate tax costs. If you plan to issue options, ensure you meet the conditions (company size limits, employee worked 20+ hours/week, etc.) and take advantage of this extension.
Other supports – The Special Assignee Relief Programme (SARP) for attracting overseas talent was extended 5 years (though with a higher income qualifying threshold)gov.ie – relevant if you’re bringing in senior execs from abroad. The Foreign Earnings Deduction (for staff who travel to develop markets abroad) is extended 5 years and increased to €50kgov.ie, which could help export-oriented SMEs who send employees overseas to drum up business.
In sum, Budget 2026’s tax measures offer SMEs a mix of carrots to invest in growth. The key is to identify which incentives apply to your business:
If you have any R&D-like activity, talk to your accountant or advisor about claiming the R&D credit at 35%. This includes activities like improving a manufacturing process, developing software tools for in-house use, or creating new product formulations – not just lab research.
For companies in gaming, digital media, or film/TV (e.g. animation studios, VFX companies), be aware of the extended credits and higher relief for visual effects in film (40% credit for VFX-heavy productions)gov.ie.
Plan capital purchases (machinery, vehicles, IT equipment) with energy efficiency in mind to leverage accelerated write-offs – essentially a financial planning for SMEs in Ireland that aligns with going green.
Use KEEP options or bonuses to motivate your team in lieu of purely salary hikes – now that the scheme continues, it’s a tax-efficient way to share future company growth with employees.
Finally, ensure you maximize routine tax reliefs: e.g. the Corporation Tax startup relief (3-year tax holiday on profits up to €40k/year for new startups), the Knowledge Development Box 6.5% rate on IP income, and other supports (Enterprise Ireland and Local Enterprise Office grants) which continue alongside Budget 2026 measures. Many SMEs miss out on these due to lack of awarenessamerginconsulting.com, so it’s wise to review your tax strategy with a professional – potentially via an outsourced CFO service – to exploit every opportunity in the 2026 landscape.
Digital transformation is a clear focus of Budget 2026’s business supports, reflecting Ireland’s drive to boost SME productivity. The budget increased funding for agencies like Enterprise Ireland specifically to help companies scale and adopt technologytechcentral.ietechcentral.ie. Here are key points on the digitalization front:
Enterprise Ireland & Local Enterprise Office (LEO) Supports: The Department of Enterprise is getting €1.3 billion, partly to establish a Small Business Unit and a Cost of Business Advisory Forumthinkbusiness.ie. More tangibly for SMEs, a new Start-up Ireland initiative and National Enterprise Hub will launch to streamline access to grantsthinkbusiness.ie. This means the process to apply for digital transformation grants in Ireland (and other business grants) should get easier. If you’ve been overwhelmed by grant paperwork before, look out for the new “one-stop” enterprise hub in 2026 that can guide you on available supports.
Digital Transformation Grants (Ireland): While not explicitly named in the budget speech, there are existing schemes likely to continue or expand. For example, the Digital Start grant or Online Trading Voucher (through LEOs) offer funding to help small firms build e-commerce sites or adopt digital tools. Also, Enterprise Ireland’s Digitalisation Voucher program (which provided up to €9k for digital strategy consulting) may get renewed funding. Budget 2026’s emphasis on digital adoption – including promoting AI across agenciesthinkbusiness.ie – suggests new grants or vouchers could be introduced. SMEs should be prepared to quickly apply for such supports in 2026.
VAT E-Invoicing Requirement: A significant upcoming change is the move toward electronic invoicing for B2B transactions. As part of EU-wide VAT modernization, the Irish Revenue will begin a phased rollout of mandatory e-invoicing for businessesgov.ie. Though not a direct budget “item”, the Finance Minister announced a plan to implement domestic e-invoicing in line with EU changesgov.ie. This will likely begin in 2025–2026. Why this matters: SMEs will need compatible accounting software to issue and receive e-invoices in the required format (possibly PEPPOL standard). If your billing is still largely manual or PDF-based, use Q4 2025 to explore accounting system upgrades. There may be grants or tax deductions for software purchases – check with your LEO. Embracing digital invoicing early not only ensures compliance but can also streamline your bookkeeping and VAT returns.
Cybersecurity and Digital Tax Compliance: With more digital processes, the onus is on companies to keep data secure. Budget 2026 allocates funding for improving cybersecurity infrastructure nationally (indirectly benefiting the business environment). Consider investing some of your IT budget in cybersecurity tools/training – it may not be explicitly subsidized by the budget, but it’s a prudent move as you digitize operations.
Upskilling in Tech: Alongside grants for tools, keep an eye on any training supports. In previous budgets, the government funded digital skills training (e.g. via Skillnet or Education and Training Boards). If Budget 2026 directs any funds there, SMEs could get subsidized training for staff in areas like AI, data analytics, digital marketing, etc. Well-trained employees will help you maximize ROI on new tech systems.
AI and Automation: The government specifically mentioned promotion of AI adoptionthinkbusiness.ie. We may see targeted initiatives (competitions, innovation grants, or advisory programs) that encourage SMEs to implement AI solutions, whether in customer service (chatbots), manufacturing (process automation) or decision-making (data analysis). Even if your business is not “techy,” be open to how AI or automation could reduce costs (e.g. automating routine admin). Many CFOs and financial planning for SMEs in Ireland now include a digital strategy component, recognizing that tech investment can pay back in efficiency.
Practical next steps: As 2025 closes, audit your business’s digital maturity. Identify processes that are still manual or paper-based (accounting, HR onboarding, inventory management, etc.) and explore modern cloud software alternatives. Then, investigate what supports exist: contact your Local Enterprise Office to ask about current digital grants or the new Enterprise Hub plans. Preparing a project now (e.g. “implement a new ERP system” or “launch an e-commerce site”) will allow you to hit the ground running in 2026 once funding or tax supports become available. Remember, these grants often have windows and caps; being prepared means you can apply on Day 1.
Also, consider consultation with an outsourced CFO or IT advisor who understands both technology and finance. They can help build the business case (ROI) for digital investments, ensure you claim available reliefs (e.g. you might even qualify the project costs under the R&D tax credit if it involves software development), and integrate the plan into your overall Budget 2026 strategy.
Climate and sustainability initiatives in Budget 2026 will impact SMEs in two ways: increased costs for carbon-intensive activities, but also new opportunities and supports for going green. Here’s what SMEs need to know:
Higher Carbon Taxes: As noted, carbon tax climbs to €71 per tonne of CO2 in 2026 (from €68 in 2025)gov.ie, following the scheduled trajectory to 2030. For practical purposes, this means fuel costs will rise. Petrol and diesel saw the increase applied immediately in October 2025 (adding roughly 2c per liter), and other fuels like heating oil and gas will see it by May 2026gov.ie. If your business relies heavily on fuel (e.g. logistics, taxis, farming, manufacturing with oil/gas heating), these expenses will tick up. During Q4 2025, review your energy usage: it might be worth investing in fuel-efficient equipment or locking in energy contracts where possible to mitigate the impact. Encourage simple staff practices to save energy (route planning, turning off idle machinery) – it can add up given rising costs.
Electric Vehicle (EV) Incentives: To nudge the transition off fossil fuels, Budget 2026 extended the €5,000 VRT rebate on electric vehicles to end of 2026gov.ie. If you buy a new electric van or car for your business, you won’t pay the full VRT (vehicle registration tax), making EVs more price-competitive. Additionally, company car benefit-in-kind (BIK) tax relief for EVs remains in place: in 2026, you can discount €10,000 of an EV’s value when calculating BIK for employeesgov.ie. (This relief will taper after, but for 2026 it’s significant.) So, if you provide a company car, choosing electric yields tax savings for the employee and possibly lower Employer PRSI on the BIK. Example: A sales rep’s EV worth €50k would be taxed as if it’s €40k, thanks to the €10k relief – a substantial perquisite. SMEs with fleets or company vehicles should consider accelerating EV purchases in 2025–2026 to take advantage of these incentives (and reduce long-run fuel and maintenance costs too).
Green Investment Tax Relief (Accelerated Allowances): The accelerated capital allowance for energy-efficient equipment is effectively a tax relief for green investment. Extended through 2030gov.ie, it lets businesses deduct the full cost of qualifying green equipment in year one. Normally, if you spend €20,000 on equipment, you’d write it off over 8 years (for example) – €2.5k deduction per year. With the accelerated allowance, you deduct all €20k in the first year, cutting your taxable profit immediately. This improves cash flow by reducing your 2026 tax bill. Equipment that qualifies is typically on the SEAI (Sustainable Energy Authority of Ireland) approved list – things like efficient boilers, HVAC, insulation, solar panels, energy-saving manufacturing machinery, even electric fleet vehicles can qualify. If you’ve been planning such an investment, doing it in 2026 yields faster tax relief. Combine this with any SEAI grants available for SMEs for maximum benefit.
Sector-Specific Green Supports: Certain sectors get tailored measures. For example, farmers benefit from extended reliefs for green practices like slurry storage (accelerated write-off extended 4 years)gov.ie and an expansion of farm restructuring relief to forestry. Construction-related SMEs gain from the 9% VAT on new apartmentsgov.ie which is partly an environmental move (encouraging high-density housing in cities). Also, the Living City Initiative (which gives tax relief on refurbishing old buildings) got extended and expanded to more regionsgov.ie – SMEs in construction, architecture or trades could see increased demand for retrofit projects under this scheme, now that buildings up to 1975 and more towns are included.
Environmental Compliance and Reputation: While not a Budget line item, note that regulations and public expectations are trending greener. Larger companies (and government procurement) increasingly require suppliers to have sustainability policies. SMEs should view Budget 2026’s green measures as a signal: investing in sustainability is being encouraged and will likely be rewarded long-term. Even simple steps like improving waste recycling, switching to renewable energy contracts, or offering cycle-to-work schemes can pay off through cost savings or enhanced brand value.
Action points: In Q4 2025, identify one or two “green” initiatives for 2026 that make business sense for your SME. It could be as small as switching company cars to hybrids/EVs or as large as installing solar panels on your facility. Check what grants or supports exist – e.g. SEAI offers grants for solar PV installations for businesses, and there are often local energy efficiency scheme supports. By acting early, you might beat rushes and also lock in lower prices (demand for heat pumps, solar, etc., is rising and can lead to wait times).
Moreover, factor the carbon tax into pricing strategy: If you’re in a sector where passing on fuel costs to customers is feasible (like delivery fees), communicate with customers early about potential surcharges. Many consumers understand environmental taxes are government-imposed, but transparency is key.
Finally, use the “green” narrative to your advantage – there are tax-efficient investment options like the Employment Investment Incentive (EII) that now focus on green enterprises (not directly a Budget 2026 change, but policy direction). If your startup or SME is involved in green tech or services, highlight that when seeking funding or supports, as the climate priority could open doors to additional finance or partnerships in 2026.
All SMEs should prepare for 2026, but certain sectors are particularly impacted by Budget 2026 measures and thus need to act immediately in Q4 2025:
Retail & Hospitality: These sectors face the biggest wage cost shocks. Many retail shops, cafes, and restaurants employ minimum-wage or low-wage workers; the jump to €14.15/hour will directly increase operating coststhinkbusiness.ie. Additionally, auto-enrolment will newly apply to part-time staff who meet the €20,000 threshold – for example, a retail assistant working ~28 hours/week at the new minimum wage will be eligible, requiring the employer to contribute to their pension. Hospitality businesses get a silver lining with the VAT cut to 9% from July 2026thinkbusiness.ie, which can boost customer demand or margins. However, that won’t kick in until mid-year, whereas higher wages hit from January. Why act now: Retailers and hospitality owners should use Q4 to reforecast budgets, consider price adjustments in early 2026 (can you increase menu prices slightly to cover higher wages? Many competitors will be in the same boat), and look at schedules/staffing levels for efficiency. It’s also crucial to communicate with staff – labor shortages mean you can’t afford to lose good employees, so plan how you’ll handle pay discussions. Perhaps introduce productivity bonuses or improved working conditions as non-pay perks. Also, ensure your payroll systems are updated for both the wage hike and pension deductions to avoid payroll errors in January (outsourced payroll services can be helpful here if you lack in-house expertise).
Construction & Real Estate: Construction SMEs (contractors, trades, suppliers) will see a mix of pros and cons. On one hand, fuel and materials costs are impacted by carbon tax and general inflation – running machinery or transporting materials will cost more in 2026. Labour costs in construction will also rise as even experienced workers will push for higher pay (and many will fall under auto-enrolment, adding 1.5% to labor overhead). On the other hand, Budget 2026 is pumping money into housing and infrastructure: €5bn for housing, major allocations for transport and water projectsthinkbusiness.ie. The VAT cut to 9% on new apartments through 2030 aims to kickstart apartment buildinggov.ie, which could lead to more projects and contracts for construction SMEs. There’s also a new enhanced corporation tax deduction for developers building apartments or converting buildings to residentialgov.ie – this could improve project viability and lead developers to hire subcontractors (opportunity for SMEs). Why act now: Construction firms should position themselves for this upswing – if you’re a builder, developer, or supplier, make sure you can take on new projects in 2026 (secure the needed skills, capacity, or finance). It may be worth accelerating planning or permitting on projects to benefit from the VAT cut window. Additionally, engage with the housing initiatives – for example, if you specialize in retrofitting or renovations, the expanded Living City Initiative and retrofit supports could translate into more business; reach out to local authorities or advertise your services in those Special Regeneration Areas mentioned in the budgetgov.ie. Finally, keep an eye on your supply chain: locking in prices or suppliers now for 2026 projects might protect you from carbon-tax-related cost spikes on materials or fuel.
Professional Services & SMEs with 5–50 Staff: This category includes accountants, law firms, marketing agencies, consultancies, etc. Typically these businesses have moderate-to-high wage employees and may not have provided pensions historically if small. Now, every such SME must implement auto-enrolment, which for, say, a 10-person firm with average salaries €50k means about €7,500 in new pension contributions in 2026. Many professional services firms already had optional pension schemes – if so, they need to ensure those meet the auto-enrol criteria or else transition to MyFutureFund. Additionally, these businesses might not feel the pinch of minimum wage, but they will feel wage pressure from skilled staff expecting raises (especially with inflation and no tax bracket changes). Why act now: Q4 2025 is the time to audit your HR policies – confirm who on your team is eligible for auto-enrolment and have a compliance plan by December (including staff communication). If cashflow is a concern, consider that you might prefund some of these contributions or adjust year-end bonuses to account for the new pension costs. Professional firms should also be early adopters of new digital compliance requirements: for instance, prepare for e-invoicing (get accounting software updates) and consider data analytics or AI tools that can improve productivity – many of your competitors will, and the government’s push on AI means clients might expect more tech-enabled service. Also, explore R&D tax credits Ireland offers beyond the obvious – even professional firms can claim R&D credit if, for example, you develop an innovative software tool for internal use or a new proprietary methodology. With the credit at 35%, it’s worth checking if you have qualifying projects.
Tech Startups and Scale-ups: Tech companies (software developers, medtech, fintech, etc.) stand to benefit greatly from Budget 2026’s innovation-friendly measures. They are likely doing R&D, so the 35% credit is directly beneficialgov.ie. Many are also in growth mode – the extended KEEP share option scheme and higher CGT entrepreneur relief both make it easier to attract talent and eventually exit lucrativelygov.iegov.ie. Additionally, digital startups may tap the Digital Games Tax Credit if in gaming, or leverage Enterprise Ireland’s increased funding for scaling companiestechcentral.ietechcentral.ie. Why act now: Founders and CFOs should revisit their financial plans and cap tables in Q4. For example, consider granting share options before year-end or early 2026 under the extended KEEP to lock in key staff – now you know the scheme runs till 2028, you can safely include it in your retention strategy. Also, plan R&D activities to maximize the new credit – if you have discretionary R&D spend, it might make sense to incur it in 2026 to get the higher credit (but remember the payable credit year cap). Tech startups should also check if they qualify for the startup corporation tax relief (three-year tax holiday); if 2026 will be your first profit year, timing matters to avail it. On the compliance side, don’t ignore that auto-enrolment applies to you too – startup teams often are young and well-paid, meaning virtually all will be eligible and expecting their pension contributions. Build that into your runway calculations (investor CFO services often model these, but if not, do it now). Finally, take advantage of outsourced CFO services for startups or financial advisors if needed – budgeting for hyper-growth alongside these new regulatory costs can be complex, and expert input can ensure you don’t run into a cash crunch due to unplanned obligations.
Manufacturing & Export SMEs: A quick note for manufacturers, distributors, and other producers: you may be affected by a broad mix of the above – wage pressures if you employ lower-wage operatives, energy costs from carbon tax, and possibly positive news like market diversification funding the government mentioned (money to help firms find new export markets in face of trade tensions)thinkbusiness.ie. Also, if you export outside the EU, note the Foreign Earnings Deduction extension (helps reduce tax for employees traveling abroad for sales) which could encourage more aggressive market expansiongov.ie. Why act now: Identify if you can benefit from schemes like the R&D credit or Accelerated capital allowances for upgrading your plant machinery. If you’ve been postponing equipment modernization, 2026 might be the year to do it with the tax relief and possibly grants. And like others, ensure you’re set for auto-enrolment – many manufacturing workers will qualify, and missing it could literally “cost” your business via fines.
In short, every sector has homework in Q4 2025, but the priority areas differ. Use the checklist in the next section to guide your immediate to-dos based on your industry. If you operate in one of the high-impact sectors above, consider scheduling a planning session (many SMEs are doing this with consultants or through a free consultation with firms like ours) to devise a sector-specific action plan.
With only a few months until these changes kick in, Irish SMEs should tackle the following checklist before year-end 2025 to stay ahead:
Budget Reforecast: Update your financial projections for 2026 factoring in: the minimum wage increase (use actual staff hours to quantify the impact), auto-enrolment pension contributions (1.5% of eligible payroll), any salary raises you anticipate, and higher fuel/energy costs from carbon tax. Identify if cost increases will erode your profit – if so, decide on mitigating actions (price increases, cost cuts, efficiency gains) to implement now. It’s vital to preserve cash flow as these new costs hit.
Implement Auto-Enrolment Systems: Don’t wait – register with NAERSA (the auto-enrolment authority) as soon as the employer portal opens in Q4 2025amerginconsulting.com. Compile a list of all employees who meet eligibility (age 23-60 and earning over €20k)amerginconsulting.com. Engage your payroll provider or software vendor to ensure the auto-enrolment module is installed and tested. Train whoever runs payroll on the new process (deducting contributions, handling opt-outs/refunds if employees choose, etc.). Draft employee communications about the scheme – you’ll need to notify staff in writing of their enrollment and rights. Having template letters ready now will save last-minute scrambles in January. Tip: If this feels overwhelming, consider using outsourced payroll services or consulting an HR/payroll expert. They can handle setup and ensure ongoing compliance, which is worth it given penalties for mistakes.
HR Strategy for Wage Changes: Plan your approach to the wage increase and likely employee expectations. Calculate the new pay scales for any staff currently under €14.15/hr and prepare those adjustments. For employees not on minimum wage, gauge if market rates or inflation would merit a raise in 2026 – it’s often better to be proactive in retaining talent than to react to turnover. Also review your staffing levels and schedules: higher wage costs might necessitate tweaking shift patterns or cross-training staff to do more with a leaner team (without burning them out). If you foresee needing to cut hours or roles to afford the increases, seek advice early – there are legal considerations if making redundancies or contract changes. Conversely, if you plan to pass on costs through prices, get your Q1 2026 pricing strategy finalized in Q4 so you can communicate changes to customers smoothly.
Tax Credit and Relief Review: Conduct a thorough review of every tax credit, relief or grant your business could use in 2026:
R&D Tax Credit: Identify any projects or expenses that might qualify. If you’re already claiming, note the higher 35% rate and consider accelerating or postponing spend to maximize benefit. If you’ve never claimed, engage a tax advisor to explore if you have qualifying R&D – many businesses are surprised to find some activities do count. Start preparing documentation (project descriptions, cost tracking) to support claims.
Capital Investments: Make a list of capital expenditures you were considering in the next few years (vehicles, machinery, IT systems, energy upgrades). Prioritize those that qualify for accelerated allowances or grants. If finances allow, time the purchase in 2025 or 2026 to leverage the immediate write-off or available grant budgets. For example, ordering an electric van in December 2025 might secure the VRT relief before any policy changes and give you the asset to write off in 2026 accounts.
Corporate Restructuring/Exit: If you’re planning to sell your business or a property, note the CGT entrepreneur relief limit rise to €1.5m in 2026. You might defer a sale into the new year to utilize it (but consult your tax advisor to ensure you qualify). Also, if you’re considering succession planning (passing business to family), there may be other reliefs (retirement relief etc.) to factor in around the €500k–€1m range – get advice tailored to your situation.
Employment Incentives: If hiring or retaining staff is key, look at the extended KEEP scheme. Q4 is a good time to implement a share option plan so that in 2026 you can issue options under the new extended timeframe. Similarly, if you will send employees abroad, ensure to claim the Foreign Earnings Deduction for those markets now eligible (the scheme now includes trips to Türkiye and the Philippines, for instance)gov.ie.
Engage with Supports: Reach out to enterprise support organizations now, rather than after the Budget dust settles:
Contact your Local Enterprise Office (LEO) or Enterprise Ireland advisor to discuss what Budget 2026 programs might apply. They often have the inside track on when new grants (like digital vouchers or expansion funds) will launch and can help you prepare applications. For example, if a digital transformation grant or an AI adoption fund is anticipated, you can start scoping the project and gathering required info (quotes from vendors, project plans) so you’re ready on day one.
If you’re in a specific industry, join relevant webinars or briefings (many industry associations will host Budget 2026 info sessions in Oct/Nov 2025 focusing on their sector). These can surface niche opportunities, like a tourism business learning about a Failte Ireland grant for sustainability, or a manufacturing firm learning about a new export financing scheme.
Schedule a planning session with your accountant or a fractional CFO. A professional can help integrate all these changes into your financial model and ensure nothing is overlooked. (Amergin offers free strategic consultations for SMEs – see below.)
Compliance Check: New regulations accompany the Budget measures. Besides auto-enrolment and e-invoicing, ensure compliance with any sector-specific changes. For example, if you’re in food service, the VAT change to 9% in July means adjusting your point-of-sale systems and accounting software mid-year – mark that on your calendar to implement on time. If you provide company cars, update your BIK calculations for the new EV category and thresholdsgov.ie. It’s also a perfect time to do a general compliance audit: are your employment contracts up to date (with new pension obligations, etc.)? Is your payroll ready for statutory sick pay changes? It’s easier to address these in December when things are quieter than to firefight in Q1.
Communicate and Educate: Finally, bring your team along. Inform your management and key staff about Budget 2026 impacts – for instance, your HR manager should be fully briefed on auto-enrolment duties and any policy changes, your finance team should understand the new tax credits and accounting changes, and operational managers should be aware of cost-saving targets or process changes due to higher costs. If employees ask “what does the Budget mean for me?”, be prepared to answer: e.g. “You’ll be auto-enrolled in a pension from January and we’ll contribute to it”; “Your payslip will look a bit different with pension deductions but your take-home isn’t affected by that since it’s your savings”; “We are adjusting our business strategy to ensure we remain competitive despite higher costs.” Transparent communication can improve buy-in for any tough decisions (like modest price increases or cost cuts) that you implement as a result.
By systematically working through this checklist in Q4 2025, SME owners and managers can enter 2026 confident and prepared. The key is not to procrastinate – some changes, like auto-enrolment setup or grant applications, can take weeks to arrange. It’s far better to finish preparations by early December than to be scrambling in late January when deadlines or penalties loom.
Budget 2026 presents a pivotal moment for Irish SMEs. The changes effective in 2026 are far-reaching – from how you pay your employees and comply with pension laws, to what opportunities you have to recover costs through tax credits and grants. The fourth quarter of 2025 is your last chance to get ahead of these developments: proactive planning now will differentiate the businesses that thrive in 2026 from those that struggle.
As we’ve outlined, there are actionable steps you can take immediately: re-budgeting, implementing new systems, seeking out supports, and making strategic investments. Rather than view the Budget as a threat, approach it as a chance to strengthen your business’s foundations (compliance, financial resilience) and to seize incentives that can fuel growth (innovation, digitalization, green upgrades). Many SMEs are turning to expert partners to help navigate this complexity – whether that’s outsourcing payroll to ensure error-free auto-enrolment, or engaging CFO services for startups to refine financial strategy.
Amergin has been at the forefront of guiding Irish SMEs through regulatory and financial shifts. We invite you to book a free consultation to discuss what Budget 2026 means for your organization specifically, and to develop a tailored action plan for Q4 2025 and beyond. Our team can help you turn compliance obligations into strategic advantages, ensuring you enter 2026 confident and compliant.
Schedule your complimentary planning session here: Book a Free Budget 2026 Consultation (https://calendly.com/amergin-group_free/30min – let’s chart a course to make 2026 a successful year for your business.
This article provides general guidance and does not constitute financial or legal advice. While every effort was made to ensure accuracy, Budget 2026 measures and regulations (including auto-enrolment rules, tax law details, etc.) may be subject to further refinement in the Finance Act and implementation phase. Business owners should consult with qualified professional advisors (e.g. tax consultants, financial planners, or legal counsel) to get advice tailored to their specific circumstances. Preparations and decisions should be made in light of the most current information and professional guidance.
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)