Martin Lewis issues update on ‘really important change’ to new 55p per mile tax rule | Personal Finance | Finance

Martin Lewis has drawn attention to a “really important” but “undercovered” tax change for drivers introduced this month. Last week, the Chancellor Rachel Reeves confirmed a 10p per mile hike in tax-free mileage rates backdated to April 2026, in a major boost for millions of car owners.

It has seen the approved mileage allowance for petrol and diesel drivers increase from 45p per mile to 55p per mile, mitigating some of the increased costs drivers are facing due to geopolitical factors, including the war in Iran and Russia‘s ongoing invasion of Ukraine. The Treasury said the change to the rates, the first since 2011, would benefit people who need to drive for work, suggesting it could save drivers as much as £120 for a worker travelling 6,000 business miles using their own vehicle.

Mr Lewis, the founder of MoneySavingExpert.com, is keen for drivers to be aware of it, suggesting it didn’t get as much news coverage as it should have done.

Reponding to confirmation of the new rate on BBC Radio 5 Live, the personal finance guru told host Adrian Chiles: “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.”

He explained the mileage allowance 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 earned money. It’s a special allowance. So moving that from 45p to 55p is important.”

He also drew attention to the fact that if employers don’t give workers the full amount of the mileage allowance, they can claim the difference for driving done as part of their work.

Meanwhile, if your employer doesn’t provide money for any of, you could claim tax back on the 55p, with self-employed people driving for their work also able to reduce their overheads through the allowance, he added.

The change has followed pressure from industry experts to increase the mileage rates given the marked increase in the costs of running a car since 2011.