The non-public finance skilled stated it was doubtlessly probably the most ‘essential’ of all of the modifications unveiled by Chancellor
Martin Lewis highlighted new 55p a mile rule for drivers (Picture: ITV)
Martin Lewis has highlighted how drivers masking fewer than 10,000 miles yearly for work functions stand to learn from a brand new 55p fee. Motorists utilising their automobiles for skilled causes will now be eligible to assert tax reduction at 55p per mile for the primary 10,000 miles accomplished throughout the tax yr — a rise of 10p from the earlier fee of 45p per mile.
Mr Lewis described this as doubtlessly probably the most ‘essential’ of all of the modifications unveiled by Chancellor Rachel Reeves. Final week, Ms Reeves introduced a discount within the VAT fee on tickets for theme parks, zoos and museums from 20% to five% all through the summer time holidays.
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The Chancellor outlined the measure as a part of a broader bundle designed to alleviate the price of dwelling pressures stemming from the Iran conflict.
Additional bulletins from Ms Reeves included a 10p per mile rise in tax-free mileage charges backdated to April, a £350 million essential chemical substances resilience fund, a £120 million fund to assist the ceramics trade, and the removing of import tariffs on greater than 100 classes of meals merchandise.
Mr Lewis advised BBC listeners: “The massive one which I believe goes to be under-covered, however is definitely actually essential, is the rise within the mileage allowance for individuals who drive as a part of their work. This has been frozen at 45p since, I believe 2011, so the rise from 45p to 55p for the primary 10,000 miles that you simply drive is admittedly essential.
“To clarify to individuals how this works, if you happen to drive as part of your work, and the massive sector that is crucial on that is care employees who’re driving from home to accommodate to accommodate.””What this mileage allowance does is that is the quantity that your employer may give you to cowl your prices, and you do not pay tax and Nationwide Insurance coverage on it. So it does not depend as like earned cash. It is a particular allowance.”
SG Accounting’s managing director Dan Mepham warned in a press release to ContractorUK: “It’s good to see HMRC rising the authorised mileage allowance by 10p [because] gas, insurance coverage, servicing and automobile prices have all gone up considerably over latest years.
“[While this will feel] like a fairer reflection of the true price of utilizing your individual automobile for work, it received’t undo all of the tax hits contractors and small companies have needed to face over the previous couple of years. [Plus], don’t neglect these non permanent office guidelines to make sure you and your claims are staying on the best aspect of HMRC.”
Mr Lewis defined that an exemption applies – it is not for individuals going to and from work – however even when the employer does not pay that fee they’ll declare it again in tax. He stated: “So shifting that from 45p to 55p is essential. It is usually price noting that even when your employer doesn’t provide the full quantity of the mileage allowance, lets say they provide you 30p. And the allowance is 55p.”
“For quantities that you simply drive for work, not commuting, to not and from work, that is intra-work journey, intra-day work journey, you possibly can declare that 25p per mile again – tax again on it – since you’d have been paid that in your wages, you are having to pay it, you will get the tax again within the distinction between what they provide you and the complete allowance. And in the event that they did not provide you with something, you possibly can declare the complete 55p again.
“And comparable applies to people who find themselves self-employed for driving of their work.
“This has lengthy been a criticism I’ve received, so I believe the change from 45p a mile to 55p a mile backdated to April 2026, so backdated a few months, is admittedly going to be fairly helpful for individuals.”
“It is just for the primary 10,000 miles, there is a decrease fee after that. I have never heard something about that fee being modified. I additionally have not heard something about whether or not they’re altering the speed for individuals who cycle, as a result of there may be an allowance for biking that you simply’re allowed to assert too. I’ve simply received my crew attempting to test on that.”
In a submit on X, Mr Lewis continued: “The work mileage allowance for underneath 10,000 miles will rise by 10p to 55p backdated to April 2026.””So this implies if you happen to drive for work in your individual automobile (like many care employees for instance) you may be given as much as 55p a mile tax and NI free. And if you happen to’re not on condition that stage you possibly can declare the tax again on the distinction between what you are given and that quantity. So if you happen to’re given 30p per mile. You’ll be able to reclaim tax paid in your wages for the 25p/mile distinction.”
The 45p, now 55p, per-mile fee covers vehicles and vans, dropping to 25p past 10,000 miles. For motorbikes and bicycles, a hard and fast fee of 24p and 20p respectively applies, regardless of mileage travelled. Claims are often submitted by HMRC or included inside your tax return for these finishing self-assessment. Unions have welcomed the announcement concerning the elevated mileage fee for employees required to make use of their private automobiles for work.
NEWS: The work mileage allowance for underneath 10,000 miles will rise by 10p to 55p backdated to April 2026.
So this implies if you happen to drive for work in your individual automobile (like many care employees for instance) you may be given as much as 55p a mile tax and NI free. And if you happen to’re not on condition that stage…
— Martin Lewis (@MartinSLewis) Could 21, 2026
Rachel Reeves introduced a 10p per mile rise in tax-free mileage charges, backdated to April 2026, rising from the prevailing fee of 45p. The Chancellor advised MPs: “Having heard from (Labour former minister Jim McMahon) and the commerce union Unison, I can at present announce a 10p per mile enhance in tax-free mileage charges backdated to April 2026 – benefiting those that must drive for work, from care employees to plumbers.”
Unions have been campaigning for years for the speed to be elevated. Unison common secretary Andrea Egan stated: “This straightforward measure will present rapid assist for numerous frontline employees in public companies. Significantly at a time when dwelling prices are going by the roof as soon as once more.””Individuals who want their very own vehicles for work have been left 1000’s of kilos out of pocket for a lot too a few years. Unison has campaigned arduous for this lengthy overdue change. It is good to know the Chancellor has listened to the considerations of workers penalised by frozen charges.””There’s nonetheless extra to do to make sure no-one is shedding out and the union will proceed to marketing campaign for extra over the approaching months.”
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