John Healey has confirmed that UK motorists will face a 35p per mile change as part of announcements made in his Autumn Budget. Drivers using their cars for work will be able to claim higher tax relief under the updates, following on from changes made by Rachel Reeves earlier this year.
Higher mileage rate increase
Mr Healey has confirmed that higher-mileage drivers, travelling over 10,000 business miles per year, will be able to claim back 35p per mile on petrol, diesel or electric costs. This is up from the current HMRC mileage rate of 25p per mile for those travelling over 10,000 miles as he aimed to help individuals who “rely on their cars”.
It doesn't stop there. Ms Reeves temporarily increased tax relief rates from 45p to 55p for the first 10,000 business miles for the 2026/27 tax year. The policy was set to be reviewed, but Mr Healey has now confirmed that the 55p rate will remain in place.
Reaction to the announcement
He said: "Anyone who relies on their car for work, from care workers to engineers, I'm increasing the higher mileage rate from 25p to 35p per mile. And I'm making permanent the increase to the standard mileage rate introduced this year."
Reacting to the announcement, John Cassidy, Managing Director at Close Brothers Motor Finance said: "Increasing the higher mileage rate from 25p to 35p is helpful for millions who rely on their own vehicles to earn a living."
Analysis and other Budget measures
Analysis from Close Brothers Motor Finance, nearly half (47%) of UK motorists use their vehicle for work or business, with fuel and energy bills ranking as the single biggest operational challenge for 52% of them.
Steve Walker, Head of Digital Content at Auto Express, added: “Keeping the tax-free business mileage rate at 55p per mile, increasing the higher rate from 25p to 35p and extending the 5p-a-litre fuel duty cut until July are both welcome news for motorists facing high running costs.”
It wasn't the only motoring announcement in the Budget, with Mr Healey confirming that fuel duty would be frozen until July. Meanwhile, Mr Burnham’s VAT cut on domestic electricity rates has also been extended into the summer.
Mr Healey added: “For millions of people the cost of living and the cost of doing business is the same. The home is the office and the van is the family car.”
