Rachel Reeves has confirmed a 10p per mile rule change for drivers covering under 10,000 business miles annually. The Labour Party Chancellor made the announcement regarding new HMRC mileage rates in the House of Commons on Thursday, May 21.
New Mileage Rates for 2026-27
Ms Reeves confirmed a 10p per mile increase in tax-free mileage rates for the 2026-27 tax year, backdated to April 2026. This adjustment raises the rate from 45p to 55p per mile for cars and vans. The change applies to the first 10,000 business miles driven in a tax year.
Martin Lewis, the BBC and ITV financial expert, commented: "Aside from the 10p uplift to cars and vans pre-10,000 miles, all other mileage rates will remain the same and will not change. The Government has said that these rates will be reviewed at the next Budget."
He added: "Note: While these changes are applicable UK-wide, Scottish public and healthcare sectors have their own collectively agreed mileage rates. If this applies to you, you should ask your employer if it plans to make any changes."
Additional Measures Announced
In the same statement, Ms Reeves confirmed a reduction in VAT to 5% on summer attractions such as theme parks and soft-play centres during school holidays. This move aims to alleviate financial pressure on households amid the ongoing conflict in Iran.
The Chancellor also told MPs on Thursday that she would raise additional taxes from global oil firms operating in the UK to help cover the costs of her plans.
Industry Reactions
Mark Way, President of AMC Europe and Managing Director of Odeon Cinema Groups, said: "ODEON welcomes today’s announcement focused on making cinema even better value and support any measures that seek to help cinema-goers, the industry and consumers more broadly."
He continued: "As the UK’s largest cinema operator, we believe these measures will continue to help drive strong demand and we’re excited that our guests will be able to enjoy the big screen for less over this blockbuster summer."
Tim Richards CBE, Founder and CEO of Vue, stated: "As we anticipate an incredible summer of family films, we welcome this step from the government to help more families enjoy the Big Screen Experience over the holidays."
