- The 55p-per-mile tax-free rate for business driving will be made permanent for the first 10,000 miles.
- The rate for additional business miles will rise from 25p to 35p from April 6, 2027.
- Tariff cuts on more than 100 products are expected to save households around £21 a year on groceries.
The UK government has announced five “everyday fixes” aimed at easing the cost-of-living pressures facing households and businesses, including changes to tax-free mileage rates, lower tariffs on selected food products and expanded parental pay.
The measures were unveiled on Tuesday (27), ahead of the Budget on Wednesday (28). Ministers say the package is intended to put money back into people’s pockets while addressing everyday expenses that have remained difficult for many families.
One of the main changes concerns employees and self-employed people who use their own vehicles for business travel. The government will make the 55p-per-mile tax-free mileage rate permanent for the first 10,000 business miles, while the rate for miles above that threshold will rise from 25p to 35p from April 6, 2027.
The Treasury estimates that the mileage changes will benefit around three million employees and self-employed people. Compared with the rates in place before April 2026, it estimates additional tax savings of £120 a year for someone driving 6,000 business miles and £300 for someone covering 15,000 miles.
The rates for motorcycles and bicycles will remain unchanged at 24p and 20p per mile respectively.
What are the five everyday fixes?
1. Higher tax-free mileage rates
The changes are intended to help people who rely on their own vehicles for work, particularly those who cover substantial business mileage. The benefit will depend on how much qualifying business travel an individual undertakes and their tax circumstances.
2. Lower tariffs on food and other goods
The government will remove tariffs on more than 100 products, including baked beans, chocolate and gherkins. The Treasury estimates the cuts will save households around £21 a year on food shopping.
Tariff reductions on fertilisers are also intended to help farmers, while lower tariffs on kerosene are aimed at households that use the fuel for heating.
3. Expanded parental pay
The government plans to extend parental pay to more than 150,000 parents each year. The changes include support for self-employed fathers who have previously been excluded from certain payments.
The precise eligibility rules and implementation details will determine which families benefit and when.
4. Changes to Carer's Allowance
The government plans to end the sharp reduction in Carer's Allowance that can occur when a claimant's earnings exceed the permitted weekly limit. Under the proposed approach, the benefit will instead be reduced gradually by £1 for every £1 earned above the threshold.
The change is intended to make it easier for carers to take on additional paid work without suddenly losing the allowance.
5. More Post Office parcel drop boxes
Hundreds of additional Post Office drop boxes are planned to help people send and return parcels without having to queue at counters. The expansion is intended to improve convenience, particularly during the busy Christmas period.
Ministers promise further Budget measures
Prime Minister and Chancellor John Healey said the measures were designed to address practical financial pressures, including the costs faced by people driving for work, parents with new babies and unpaid carers.
“We can’t control global events, but we can act where we can make a difference,” Healey said, pointing to the impact of conflicts in the Middle East and Europe on household costs.
The government has indicated that Wednesday's Budget will include further measures intended to give households and businesses more financial breathing room. The full impact will depend on the details of those announcements and how quickly the changes take effect.
Fuel costs remain another concern, particularly for people living in rural areas who often have fewer alternatives to driving. The Countryside Alliance estimates that rural residents spend around £1,300 a year on petrol, compared with £835 for people in towns and cities, a difference of £465.
The mileage changes may offer some relief to people who drive for business, but they are not a direct reduction in the price paid at the pump. Their value will depend on qualifying business mileage and individual tax circumstances.
The five measures form part of the government's attempt to address everyday costs alongside its wider economic plans. The Budget will reveal whether further action is planned on household bills, transport and the pressures facing businesses.
