On 21 May 2026, the Chancellor, Rachel Reeves MP, announced the ‘Great British Summer Savings’ package, a series of measures aimed at reducing costs for families, particularly those with children.
Two measures are especially relevant for businesses and employers.
Tax-Free Mileage Rates
A 10p per mile increase in tax-free mileage rates will apply for the 2026/27 tax year and is backdated to April 6th 2026.
The increase affects the amount of tax relief available on business mileage and applies to both employees and the self-employed. HMRC has updated its mileage rate guidance accordingly.
For the self-employed:
| Vehicle | Flat rate per mile for 2026/27 | Flat rate per mile before 6 April 2026 |
| Cars and goods vehicles – first 10,000 miles | 55p | 45p |
| Cars and goods vehicles – after 10,000 miles | 25p | 25p |
| Motorbikes | 24p | 24p |
For employees:
| Vehicle | Flat rate per mile for 2026/27 | Flat rate per mile before 6 April 2026 |
| Cars and vans – first 10,000 miles | 55p | 45p |
| Cars and vans – after 10,000 miles | 25p | 25p |
| Motorbikes | 24p | 24p |
| Bicycles | 20p | 20p |
It’s worth noting that only the rate for cars and vans covering the first 10,000 business miles has increased. All other mileage rates remain unchanged.
If you use your own vehicle for business purposes, employ staff who claim mileage, or operate a business with regular travel requirements, we can help you understand how these changes affect your claims and record-keeping requirements.
Temporary Reduced Rate of VAT
From 25 June to 1 September 2026, the reduced VAT rate of 5% will apply to a range of qualifying activities, including:
- Children’s meals meeting the qualifying conditions.
- Children’s cinema, theatre, show and concert admission tickets.
- Admission to qualifying attractions suitable for children, including amusement parks, museums, heritage sites, zoos and soft play areas.
For qualifying attractions, the reduced rate applies to all admissions regardless of the visitor’s age.
Businesses operating in hospitality, leisure, entertainment or visitor attractions should review their VAT treatment during this period to ensure they are applying the correct rate. We would be pleased to help you assess the impact on your business and ensure compliance with the temporary rules.
