Martin Lewis has highlighted a significant but overlooked measure in Rachel Reeves' recent announcement aimed at easing the cost of living crisis. The Chancellor unveiled a package of measures on Thursday, including VAT cuts on summer attractions and children's meals, free bus travel for youngsters, and targeted food tariff reductions, partly funded by reforms to energy firms' overseas taxation.
However, the money-saving expert drew attention to the increase in the mileage allowance for work-related driving. From April 2026, motorists can claim tax relief at 55p per mile for the first 10,000 miles travelled in a tax year, up from 45p. This rate had been frozen since 2011.
Speaking on BBC Radio 5Live, Mr Lewis explained: 'The big one that I think is going to be under-covered, but is actually really important, is the increase in the mileage allowance for people who drive as part of their work. This has been frozen at 45p since, I think 2011, so the increase from 45p to 55p for the first 10,000 miles that you drive is really important.'
He noted that the allowance applies to employees who drive for work, such as care workers, and allows employers to pay up to 55p per mile tax- and National Insurance-free. If an employer pays less, the employee can claim tax relief on the difference. For example, if an employer pays 30p per mile, the employee can claim tax back on the 25p difference. Self-employed individuals can also claim the full 55p per mile.
The 55p rate applies to cars and vans for the first 10,000 miles, dropping to 25p per mile thereafter. For motorbikes and bicycles, fixed rates of 24p and 20p per mile apply regardless of distance. Claims are made through HMRC or via self-assessment tax returns.
