Martin Lewis offered his thoughts on the changes (Image: Getty)
Martin Lewis has offered his view on one of Rachel Reeves’ announcements to help with the cost of living. The Chancellor of the Exchequer today (Thursday, May 21) unveiled a number of measures to ease the pressure on hard-up Brits.
These included things like a VAT cut on summer attractions and kids’ meals, free bus travel for children, and targeted food tariff cuts. Branded as the Government’s ‘Great British Summer Savings’ scheme, it is being funded in part by changes to how energy companies are taxed on their foreign branches.
But money-saving expert Mr Lewis drew attention to another measure which has escaped people’s attention. People who use their car for work will now be able to claim tax relief on 55p per mile for the first 10,000 miles driven in the tax year. This is up 10p from 45p per mile.
Mr Lewis told Adrian Chiles on BBC Radio 5Live: “The big one that I think is going to be under-covered, but is actually really important, is the increase in the mileage allowance for people who drive as part of their work. This has been frozen at 45p since, I think 2011, so the increase from 45p to 55p for the first 10,000 miles that you drive is really important.
“To explain to people how this works, if you drive as a part of your work, and the big sector that’s very important on this is care workers who are driving from house to house to house.
“What this mileage allowance does is this is the amount that your employer can give you to cover your costs, and you don’t pay tax and National Insurance on it. So it doesn’t count as like earned money. It’s a special allowance.
“So moving that from 45p to 55p is important. It is also worth noting that even if your employer does not give you the full amount of the mileage allowance, let’s imagine they give you 30p. And the allowance is 55p.
“For amounts that you drive for work, not commuting, not to and from work, this is intra-work travel, intra-day work travel, you can claim that 25p per mile back – tax back on it – because you’d have been paid that in your wages, you’re having to pay it, you can get the tax back in the difference between what they give you and the full allowance. And if they didn’t give you anything, you could claim the full 55p back. And similar applies to people who are self-employed for driving in their work.
“This has long been a complaint I’ve got, so I think the change from 45p a mile to 55p a mile backdated to April 2026, so backdated a couple of months, is really going to be quite useful for people.
NEWS: The work mileage allowance for under 10,000 miles will rise by 10p to 55p backdated to April 2026.
So this means if you drive for work in your own car (like many care workers for example) you can be given up to 55p a mile tax and NI free. And if you’re not given that level…
— Martin Lewis (@MartinSLewis) May 21, 2026
“It’s only for the first 10,000 miles, there’s a lower rate after that. I haven’t heard anything about that rate being changed. I also haven’t heard anything about whether they’re changing the rate for people who cycle, because there is an allowance for cycling that you’re allowed to claim too. I’ve just got my team trying to check on that.”
In a post on X, Mr Lewis continued: “The work mileage allowance for under 10,000 miles will rise by 10p to 55p backdated to April 2026.
“So this means if you drive for work in your own car (like many care workers for example) you can be given up to 55p a mile tax and NI free. And if you’re not given that level you can claim the tax back on the difference between what you’re given and that amount. So if you’re given 30p /mile. You can reclaim tax paid on your wages for the 25p/mile difference.”
The 45p, now 55p, mileage rate applies to cars and vans and drops to 25p per mile after 10,000 miles. For motorbikes and bicycles, it is a flat rate of 24p and 20p respectively, no matter the mileage. You usually claim via HMRC or through your tax return if you complete self-assessment.