Shay Brennan
Question:28. Deputy Shay Brennan asked the Minister for Enterprise, Tourism and Employment how Budget 2026 will support the SME sector; and if he will make a statement on the matter. [62048/25]
View answerThursday, 13 November 2025
Questions (28)
Written answers
Budget 2026 is a pro-enterprise Budget and was framed in consideration of the Action Plan on Competitiveness and Productivity and the Programme for Government (PfG) 2025: Securing Ireland’s Future. The ongoing Finance Bill process will ensure that the tax changes made in the Budget are placed on a legislative footing.
Budget 2026 has introduced a number of new tax measures - alongside changes to existing measures - that will support the SME sector, including the following:
• A reduction in the Hospitality VAT rate from 13.5% to 9%, which will be introduced from 1 July 2025. This reduction will apply specifically to food/catering and hairdressing. This reduction in the VAT rate will address concerns raised by the sector about business viability.
• The Employer PRSI threshold has been increased to ensure that employers do not pay the higher rate of PRSI for full-time workers earning the minimum wage.
• The R&D tax credit has been increased from 30% to 35%, with SMEs due to benefit proportionally more from this change than larger firms subject to the minimum effective tax rate. The increase in the first-year payment threshold, from €75,000 to €87,500, is also beneficial for SMEs. Furthermore, as noted by Minister Donohoe in the Budget 2026 speech, an R&D Compass will be published shortly to set out the future direction of developments in R&D and innovation.
• The Key Employee Engagement Programme (KEEP) has been extended for a further three years. KEEP is a share option scheme aimed at helping SMEs to attract and retain skilled employees in a competitive market.
• Budget 2026 has also increased the lifetime limit of the Revised Entrepreneur Relief from €1m to €1.5m, which provides a significant potential benefit for scaling companies.
In addition to these budgetary measures, the Government has taken action to address business costs through the publication of the Action Plan on Competitiveness and Productivity, and the convening of the Cost of Business Advisory Forum, which are both commitments in the Programme for Government. These places a considerable emphasis on supporting and scaling Irish SMEs, reducing administrative burden and addressing cost related matters for SMEs.
The establishment of the Small Business Unit within my Department further demonstrates the importance that the Government places on small businesses. This includes a process of simplifying access to grants and support programmes through the National Enterprise Hub and ensuring the Local Enterprise Offices are properly resourced to help small businesses. The Unit has been tasked with ensuring that the needs and issues of small businesses have a dedicated focus and are recognised and acknowledged across Government.