Chancellor Rachel Reeves has announced a 10p per mile increase in tax-free mileage rates, backdated to April 2026, benefiting those who drive for work such as care workers and plumbers. The move ends a 15-year freeze on the rate.
The increase was confirmed in a wider package of cost-of-living measures, including a temporary cut in VAT on summer attractions from 20% to 5%, free bus travel for children in England during August, and a 12-month road tax holiday for heavy goods vehicles.
Reeves also announced a reduction in duty on red diesel by over a third until the end of the year to support farmers and the rail freight industry. The government is cutting import tariffs on more than 100 products, expected to save consumers over £150 million a year.
Prime Minister Keir Starmer said the measures aim to help families afford more time together during the summer holidays. The Chancellor said the package supports households while the UK economy grows fastest in the G7.
