Chancellor Rachel Reeves has confirmed that drivers who use their cars for work and cover around 6,000 miles annually will save approximately £120. The announcement was made during her cost of living statement in the House of Commons today.
Mileage Rate Increase
HM Treasury released accompanying documents explaining that the Chancellor confirmed a 10p per mile increase in tax-free mileage rates for the 2026-27 tax year, backdated to April 2026. On average, this will save around £120 for a worker doing 6,000 business miles using their own vehicle for work.
This builds on the Chancellor’s announcement yesterday extending the fuel duty cut until the end of the year, saving motorists £120 since 2025.
Great British Summer Savings
Ms Reeves said: "Whether it is a fun day out, a family meal or taking advantage of the thousands of amazing attractions across the UK, Great British Summer Savings will support families with the little treats in life while boosting business across the UK."
She added: "This comes on top of support we’ve already put in place including freezing fuel duty, taking off £117 off energy bills, freezing prescriptions, fuel duty and rail fares. We are able to do this because we have made the right choices, resulting in the UK having the fastest growing economy in the G7, with inflation going down."
"I know the cost of living is still a number one concern for households. Our economic plan is the right one, supporting families and businesses and building a stronger and more secure Britain."
Prime Minister's Comments
Prime Minister Sir Keir Starmer said: "When I think about the summer holidays, I think about the Lake District — where I went as a child and later made memories with my own family. I know how precious that time is, yet too many parents feel they have to hold back because the cost of living is still squeezing budgets."
"This summer we’re cutting the cost of a day out together - free bus travel for children aged five to 15 in England, and VAT slashed on a wide range of kid’s attractions - so families can afford more time together."
