Chancellor Rachel Reeves has announced a 10p per mile increase in the tax-free mileage rate for employees who use their own cars for work, backdated to April 2026. The rate will rise from 45p to 55p per mile.
Speaking in the Commons on Thursday, Reeves said the move would benefit workers such as care workers and plumbers. The announcement came as part of a wider package of measures to address cost-of-living pressures, though no immediate help with energy bills was offered.
The Chancellor also confirmed a 12-month road tax holiday for HGVs, saving typical heavy lorries up to £912, and a temporary cut in duty on red diesel by over a third until the end of the year to support farmers and the rail freight industry.
Trade union Unison welcomed the mileage rate increase, with general secretary Andrea Egan stating: “This simple measure will provide immediate help for countless frontline workers in public services. Particularly at a time when living costs are going through the roof once again.” She added that the union would continue to campaign for further improvements.
Other measures announced include a temporary VAT cut on summer attractions from 20% to 5%, a £350 million critical chemicals resilience fund, a £120 million fund for the ceramics sector, and the cutting of import tariffs on over 100 food products. A “Great British Summer Savings” scheme will also provide free bus travel for children in England during August school holidays.
