Finance Bill 2025: Key Takeaways

On 16 October 2025, the Department of Finance published the Finance Bill 2025, which includes legislative provisions for tax measures that were already announced as part of Budget 2025 and new measures and amendments to the Irish tax code. Here Goodbody Head of Tax Catriona Coady details measures contained in the Bill and how they may apply to our clients.

1. REDUCTION IN 41% FUNDS TAX RATE TO 38%

As mentioned in the Budget, the Bill confirms the reduction in the tax rate from 41% to 38% with effect from 1 January 2026 on fund investments. This applies to offshore funds also meaning in general those that are similar to Irish collective investment funds and therefore not subject to tax under general tax principles (income tax and CGT). Funds tax can also apply to exchange-traded funds (ETFs) located in Ireland and other jurisdictions.

The Bill does not contain any other provisions relating to the tax treatment of investments such as the abolition of the eight-year deemed disposal rule on fund investments and as such, we await the roadmap for reform of the tax treatment of investments due for publication early next year announced by the Minister on Budget Day. This roadmap is intended to outline the approach to simplify and adapt the tax framework in Ireland to encourage retail investment. It will take into account the Fund Sector Review Report 2030 recommendations and the European Commission’s recommendations on Savings and Investment Accounts.

While the need for reform in this area is vital and should be prioritised, this reduction in rate is a positive move.

2. CAPITAL GAINS TAX (CGT) ENTREPRENEUR RELIEF

Reflecting the announcement on Budget Day, the Bill also provides for the increase in the limit to which the 10% rate of CGT applies on gains. The limit is increased from €1m to €1.5m and this increase is effective from 1 January 2026 with the gains to which the previous limit applied being aggregated with a future disposal such that the unused portion of the limit can be availed of on a future disposal.

Some relaxation of the other conditions that apply to this relief would have been welcome as they can have the effect of denying the relief particularly in group structures.

3. AUTO-ENROLMENT (AE) PENSIONS

The Bill contains a number of measures to clarify the tax treatment of AE pension funds. Key measures include confirmation that:
• employer contributions to AE pension funds will be exempt from tax;
• income and gains of AE pension funds while held by an AE provider will be exempt from tax;
• amounts paid from the fund (after any tax-free lump sum) will be taxed
• where a participant in an AE Scheme dies after reaching pensionable age an exemption from inheritance tax on an inheritance comprising all or part of a retirement fund which passes on the death of a person to that person’s child who is at least 21 years of age. This will instead be subject to income tax at a rate of 30%. This is the same rate of tax that applies on an inheritance by a child age 21 and over of an Approved Retirement Fund (ARF) or vested Personal Retirement Savings Account (PRSA).

There were no changes announced to the tax reliefs available on private pensions.

4. DONATIONS TO APPROVED SPORTS BODIES

From 1 January 2025, individual donors can claim tax relief on donations to approved sports bodies. This is available to both self-assessed and PAYE taxpayers. The same rules apply to donations to National Governing Bodies (NGBs) so taxpayers may wish to reduce their tax bills by claiming the tax relief themselves rather than surrendering the relief to the sports body or NGB.

The 2025 Finance Bill provides that an individual’s decision about whether to claim the relief themselves or give it to the approved sports body is irrevocable, either from the date a taxpayer claims the relief or files a tax return, or at the latest by 1 December in the year after the donation was made.

This relief has relevance for individuals or companies (where relief for the donation is available as a deduction against total income) who wish to make qualifying donations to sports bodies or NGBs.

5. CAPITAL ACQUISITIONS TAX (CAT) – GIFT AND INHERITANCE TAX

Business Relief
Business Relief can apply on the gift or inheritance of relevant business assets. Where it does apply, the taxable value of qualifying assets is reduced by 90% such that only 10% is subject to gift and inheritance tax. There are a number of conditions that apply to the Relief including the exclusion of assets which are known as excepted assets from the Relief. In general, excepted assets are those not used for the purpose of the business and those not used wholly or mainly for the purposes of the business concerned for a 2-year period prior to the date of the gift or inheritance. The Finance Bill provides that, in addition to this 2-year test, an asset will not be an excepted asset if, at the date of the gift or inheritance, it was required to be used for a specific purpose of the business concerned within the following 6-year period. If the asset is not so used for the specific purpose, the asset will be treated as an excepted asset and the amount of the Relief claimed will be revised.

The Bill also provides that to avoid a clawback of the Relief; the full proceeds received on a disposal must be reinvested within 1 year of a disposal of assets eligible for the Relief.

These changes apply to gifts or inheritances taken on or after 1 January 2026.

This is a valuable Relief available and the change in relation to excepted assets is welcome and preserves the intent and integrity of the Relief.

Life Policies
Currently where a life policy has been the subject of a gift or inheritance, gift and inheritance tax does not arise until:
• the policy matures, or
• prior to the maturing of the policy, the policy is surrendered to the insurer for consideration in money or money’s worth or
• the insurer makes a payment of money or money’s worth in full or partial discharge of the policy.

The Finance Bill proposes to provide that where a person, having received a gift or inheritance of such a policy, disposes of their interest in the policy before any of the above events occur, a charge to CAT will arise at the time of the disposal. The amendment will apply to a disposal of a policy of assurance on or after 1 January 2026.

This document is not to be relied upon in substitution for the exercise of independent judgement. Nothing in this publication constitutes investment, legal, accounting or tax advice, or a representation that any investment or strategy is suitable or appropriate to your individual circumstances, or otherwise constitutes a personal recommendation to you. Goodbody Stockbrokers UC does not advise on the tax consequences of investments and you are advised to contact an independent tax advisor. Please note in particular that the basis and levels of taxation may change without notice. Private customers having access to this document, should not act upon it in anyway but should consult with their independent professional advisors.