The R&D tax credit has risen from 30% to 35% of qualifying expenditure, under changes to the R&D corporation taxThe tax Irish-resident companies pay on their profits. credit made by the Finance Act 2025. Revenue updated its Tax and Duty Manual on the credit and announced the changes in eBrief No. 085/26 on 23 April 2026. The higher rate applies, in general, to accounting periods ending on or after 31 December 2026, so most companies will claim it for the first time in 2027. For how the credit works and is paid, see our R&D tax credit guide.

What changed in the R&D tax credit

According to Revenue's eBrief and Tax and Duty Manual Part 29-02-03, the Finance Act 2025 made these changes:

  • The credit rate rises from 30% to 35% of qualifying R&D expenditure.
  • The first instalment threshold rises from €75,000 to €87,500.
  • Where an employee spends at least 95% of their time on qualifying R&D, 100% of their emoluments can be included as qualifying expenditure.
  • Spending on building a laboratory used for qualifying R&D can count as qualifying building expenditure.

The timing matters. Revenue's manual says the 35% rate and the €87,500 threshold apply to accounting periods with a specified return date on or after 23 September 2027. For a company with a calendar-year end, that means the year ending 31 December 2026. The 30% rate continues for accounting periods that began on or after 1 January 2024 and end, in general, before 31 December 2026.

The eBrief also confirms that, for accounting periods beginning on or after 1 January 2023, claims are made under sections 766C and 766D of the Taxes Consolidation Act 1997. Section 766C uses the €87,500 floor for the first instalment. Under section 766D, the first instalment is simply 50% of the credit, with no floor.

More proposed in Budget 2027

Budget 2027, announced on 6 October 2026, proposed further changes. The Finance (No. 2) Bill 2026, published on 19 October 2026, would raise the first-year payment threshold from €87,500 to €105,000, add an enhancement of 5% of qualifying R&D wage costs, and raise subcontracting limits to the greater of 20% of in-house R&D spend or €200,000. These are proposals until the Bill is passed, and the Department of Finance has not yet published commencement dates for them.

What it means for Irish limited companies

A higher rate means a bigger credit for the same spend. It does not change how slowly the money arrives. The credit is claimed in your corporation tax return and, for most companies, paid in three instalments:

  • First instalment: the greater of €87,500 (or the full credit if lower) and 50% of the credit.
  • Second instalment: three-fifths of the remaining balance.
  • Third instalment: whatever is left.

Illustrative example: a company with a 31 December 2026 year end spends €300,000 on qualifying R&D. At 35%, the credit is €105,000. The first instalment is €87,500, then €10,500, then €7,000. At the old 30% rate, the credit would have been €90,000. If the proposed €105,000 threshold applies to a later period, a credit of this size could be paid in a single first instalment. These are round figures for illustration only.

The gap between spending and receiving the cash is the main pressure. A company with a December 2026 year end has until 23 September 2027 to file its return, and the R&D team's salaries are paid throughout 2026. Filing early and accurately is the simplest way to shorten the wait.

What to do now

  1. Check your accounting period end date to see which rate and threshold apply to your next claim.
  2. Keep time records for R&D staff. The 95% rule for full emoluments depends on clear evidence.
  3. Document the science or technology test for each project as you go, not at year end.
  4. Talk to your tax adviser about the Finance (No. 2) Bill 2026 proposals and when they may apply to you.
  5. Build the instalment timing into your cash flow forecast, and plan how you will fund the months before the credit is paid.
  6. File your corporation tax return as early as you can once your accounts are final.

Our guide to the R&D tax credit and funding the wait explains the claim process in more depth. For other State supports, see grants and State supports for Irish SMEs, and for the wider Budget picture read Budget 2027: what it means for company finance.

How Welcome Finance can help

For how R&D credit advances work, see our page on grant and R&D tax credit funding. Where the wait for a credit creates a general cash-flow gap, our panel can consider working capital loans. Tell us what your company needs and we'll tell you honestly whether our panel can help, or where to apply instead. Welcome Finance is a commercial finance broker, not a lender, and is not regulated by the Central Bank of IrelandIreland's financial regulator and part of the Eurosystem.. We work only with companies registered in Ireland (LTD, DACA type of Irish private company under Part 16 of the Companies Act 2014 that keeps an objects clause in its constitution, limiting what it can do, and uses the suffix DAC., PLCA company type under Part 17 of the Companies Act 2014., ULCA company under Part 19 of the Companies Act 2014 whose members have unlimited liability for its debts.) and are paid commission by lenders. We do not charge your company a fee and never ask for payment upfront.