Reeves: 10p Mileage Rise to 55p; First Raise in 15 Years
Chancellor Rachel Reeves announced in the Commons this morning a 10p per mile increase in the tax-free mileage rate, taking it from 45p to 55p, backdated to April 2026 (2026-27 tax year). The increase is the first since 2011, when George Osborne raised the rate from 40p to 45p. MoneySavingExpert quoted Martin Lewis describing it as a “really important change” for drivers; the Birmingham Mail calculated the average benefit at £120 per year. The mileage increase is, the Independent argues, “the biggest help in the measures” in today’s package — specifically aimed at the “white van man and woman” constituency that Sir Keir Starmer has been referencing.
The mileage rise comes on top of yesterday’s PMQs announcement of a 5p fuel duty cut extension through the end of 2026 and a twelve-month vehicle excise duty holiday for the haulage industry. The combined package costs approximately £400 million on the Wednesday side, with the mileage adjustment funded as part of the wider Reeves Thursday programme. The Treasury framing — that funding comes out of the “fastest-growing economy in the G7” growth dividend rather than fresh borrowing — is being tested through the Thursday-afternoon gilt market reaction; the ten-year gilt yield is currently at 5.06%, half a point off Friday’s 5.18% peak.