As part of a package of new benefits to help with the cost of living, the following measures support individuals and businesses most exposed to rising fuel costs.
All drivers
The 5p fuel duty freeze to continue until the end of 2026, instead of phasing it out in September. This covers petrol and diesel, and is one of the ways the government is helping to protect drivers form the brunt of the fuel cost rises that are a consequence of events in the Middle East.
Drive for work? tax-free mileage rate raised
Backdated to 6 April 2026, the Chancellor has raised the tax-free mileage rate which will benefit ‘those who need to drive for work, from care workers to plumbers’.
The tax-free mileage allowance has been increased to 55p per mile and has been backdated to 6th April 2026. For someone doing 10,000 business miles this could equate to an extra £1,000 per annum.
There will be no change to the tax-free rate applicable to business miles above 10,000, this remains at 25p per mile and the motorcycle rate also remains unchanged.
This is the first increase in the approved mileage rate for 15 years with the rate frozen since April 2011.
Although employers and business owners do not have to adopt it many will.
Hauliers
There will be a 12-month road tax holiday for HGVs, saving the typical heavy lorry up to £912.
Farmers and the rail freight industry
The duty will be cut on red diesel by over a third until the end of 2026
Further information
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