On Thursday 21 May, the Chancellor Rachel Reeves delivered her statement to Parliament on the Government’s economic response to the war in Iran.
One of the most noticeable announcements, that was good news for small business owners and employees alike, was a 10p per mile increase in tax free mileage rates for cars and vans from 45p to 55p per mile, backdated to April 2026.
The mileage rate had not increased since 2011, so was well overdue given the level of inflation and cost of motoring over the past 15 years.
If you currently claim mileage for business journeys in a vehicle owned personally (not by a company/employer), please use the new rate of 55p from 6 April, and amend any claims already entered in your accounts where necessary.
This rate only applies to the first 10,000 miles per tax year, with anything over that remaining at the 25p per mile rate. The extra 5p per mile when carrying a business passenger also remains the same.
Note also that the rates for motorbikes remain the same and the fuel only rates for company owned cars are also unaffected by these changes.
Other announcements in the statement included:
For hauliers, a 12-month road tax holiday for HGVs, saving the typical heavy lorry up to £912.
To support farmers and the rail freight industry, a cut on the duty on red diesel by over a third until the end of this year.
A temporary cut in the rate of VAT on summer attractions and children’s meals in restaurants from 20% to 5% over the summer holidays.
The full statement can be read here.
