Budget 2026: Strengthening succession planning through targeted tax reform

As Budget 2026 approaches, there is an opportunity to refine key tax reliefs to support generational transitions, preserve Irish ownership and protect regional employment. This article outlines the current landscape and sets the stage for practical reforms to Capital Acquisitions Tax (CAT), Capital Gains Tax (CGT) and related reliefs.

Why succession matters

Ireland’s indigenous business sector plays a vital role in economic stability, particularly as the country seeks to reduce its reliance on corporation tax receipts from a small number of multinational firms. Succession planning enables continuity, safeguards jobs and supports local communities. However, the tax code must evolve to reflect modern business structures, asset values and family dynamics.

Current reliefs and challenges

From 1 January 2025, CAT group thresholds increased to €400,000 (Group A), €40,000 (Group B) and €20,000 (Group C), offering some relief amid sustained asset inflation. Business Relief and Agricultural Relief continue to reduce taxable values by 90%, subject to qualifying conditions. These reliefs are central to enabling transfers without triggering disproportionate tax liabilities.

CGT Retirement Relief has supported SME succession since 1975, but recent changes have introduced caps and tapering that may discourage early planning. Entrepreneur Relief, introduced in 2015, offers a 10% CGT rate on qualifying disposals, subject to a €1m lifetime limit. While attractive to start-ups, its role in succession planning is limited by the cap.

Other schemes, such as the Key Employee Engagement Programme (KEEP), were designed to support growth and retention but have seen low uptake due to complexity and cost. The CAT dwelling house exemption remains relevant for family home transfers, though restrictive conditions apply.

In farming, stamp duty reliefs, including consanguinity, young trained farmer, consolidation and long-term leasing, continue to underpin intergenerational transfers and structural reform. However, recent legislative changes to Agricultural Relief have raised concerns about practical implementation and clarity.

The case for reform

Ireland’s tax system must support genuine succession without creating cliff edges or forcing premature sales. Reliefs should be targeted, simplified and aligned with commercial reality. This includes recognising phased transitions, modern ownership structures and the role of employees in long-term stewardship.

With strong overall tax receipts and a policy direction focused on sustainability, Budget 2026 presents an opportunity to recalibrate succession-related reliefs. Doing so will help retain Irish businesses in Irish hands, support regional vitality and contribute to a more balanced and resilient tax base.

Next steps: practical reform proposals

While the current tax landscape provides a foundation for succession planning, there is a clear need for targeted reforms that reflect today’s business realities. In the next article, we explore practical proposals to refine CAT, CGT and related reliefs, supporting generational transitions, empowering employee-led ownership and strengthening the long-term resilience of Irish SMEs and family farms.

Read more:Budget 2026: Practical tax reform proposals to support succession and employee-led ownership