Chancellor Rachel Reeves has introduced a new policy to support drivers who use their personal vehicles for work. This initiative includes a 10p increase in tax-free mileage rates, boosting the current rate from 45p to 55p per mile. The increase is set to be backdated to April 2026.
Support for Workers
This change aims to assist various workers, including care providers and tradespeople, who rely on their vehicles for their jobs. Reeves made this announcement during a session in the House of Commons, with encouragement from trade unions advocating for the increase.
Union Response
Unison’s general secretary, Andrea Egan, praised the decision. She emphasized the urgent need for this modification, highlighting that many workers have faced financial hardships due to stagnant mileage rates. Egan stated, “This simple measure will provide immediate help for countless frontline workers in public services.”
Additional Financial Relief Measures
Alongside the mileage rate increase, Reeves unveiled other fiscal measures designed to ease the cost-of-living crisis. The government plans to:
- Offer a 12-month road tax holiday for heavy goods vehicles, potentially saving each lorry owner up to £912.
- Reduce duty on red diesel by over one-third until the end of the year to support farmers and the rail freight sector.
- Temporarily cut VAT on summer attractions from 20% to 5% during the holiday period.
- Introduce a £350 million resilience fund for critical chemicals.
- Allocate £120 million to assist the ceramics industry.
- Eliminate import tariffs on more than 100 food products.
Great British Summer Savings Scheme
Reeves’ “Great British Summer Savings” scheme will also provide free bus travel for children in England throughout August, targeting affordability for families engaging in summer activities. The changes will take effect from June 25 and last until September 1, covering various attractions and reducing the cost of children’s meals in restaurants from 20% VAT to 5%.
This comprehensive approach aims to address immediate economic pressures while supporting essential workers significantly affected by rising living costs.
