Budget 2025 started with a notably upbeat tone, pointing to the “strong position” of the economy while aiming to continue on a “positive trajectory” with the policies and measures that were announced.
The budget included a series of measures designed to support businesses, with a clear recognition of their vital importance in driving innovation and growing the Irish economy.
Below, we highlight the key announcements affecting innovative businesses from Budget 2025, including all the R&D Tax Credits and capital allowances changes.
What does Budget 2025 mean for R&D Tax Credits?
The Irish Government has announced that they’re increasing the first-year payment threshold for R&D Tax Credits, rising from €50,000 to €75,000.
This brings welcome support for first-time claimers and those who are engaging in smaller R&D projects. It’s positive to see that more businesses will be supported with a cash-flow boost, which can be reinvested in further innovation and growth. The change was described as an interim measure, which is being introduced before a full review of R&D Tax Credits that’s taking place over the year ahead. The full details of the review have yet to be announced, but we know that it aims to find better ways of supporting “innovative businesses as they evolve to meet the challenges, and seize the opportunities, of an increasingly digitalised world”.
What does Budget 2025 mean for capital allowances?
There were relatively few changes announced to the capital allowances scheme, although the budget did provide targeted support for the agriculture industry by extending the accelerated capital allowance (ACA) for farm safety equipment.
There was also a year extension of the accelerated capital allowance scheme for gas and hydrogen-powered vehicles. This extension allows the Department of Transport to review the scheme to ensure it effectively supports decarbonisation while meeting Ireland’s heavy transport needs.
Along the same theme, the government is reducing the maximum emission levels for company cars to qualify as low emitting when claiming capital allowances. The current limit is 155 grams of CO2 per kilometre, which will be reduced to less than 140 grams starting from 1 January 2027 (to allow time for the transition). The measure is designed to encourage more businesses to choose electric vehicles as part of a continued drive to decarbonise the Irish economy.
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Our expert team of tax and technical experts help businesses navigate the complexities of valuable government incentives, including the R&D Tax Credits and Capital Allowances schemes. With over 25 years of experience, we ensure that companies can claim the maximum amount they’re entitled to.
Is your business looking to take advantage of valuable tax savings? Get in touch today.
