The Chancellor, Rachel Reeves, announced a series of new tax and cost-of-living measures this week aimed at supporting households and businesses through the summer period.
Below is a summary of the key changes that may affect individuals and businesses.
Key Tax Announcements
1. Temporary VAT Reduction on Family Activities
From 25 June to 1 September, VAT will be reduced from 20% to 5% on a range of family-focused activities and children’s meals. This is expected to include attractions such as cinemas, theme parks, zoos, and similar leisure venues.
The government has also published additional guidance on the “Great British Summer Savings” VAT relief initiative, which is available here.
2. Fuel Duty Increase Cancelled
The planned increase in fuel duty has been cancelled, with the existing 5p per litre reduction remaining in place. This is intended to help ease transport and commuting costs for both households and businesses.
3. Increase in Tax-Free Mileage Allowance
The approved mileage allowance for business travel will increase by 10p per mile, providing additional tax relief for employees and business owners using their own vehicles for work purposes.
The approved mileage rate for cars and vans will increase from 45p to 55p per mile for the first 10,000 business miles travelled each tax year. The rate for mileage above 10,000 miles remains unchanged at 25p per mile.
4. Reduction in Import Tariffs on Food Products
The government announced the suspension or reduction of import tariffs on selected food items, including chocolate, biscuits, dried fruit, and nuts. The aim is to help reduce pressure on supermarket prices.
5. Measures to Close Corporate Tax Loopholes
New anti-avoidance measures will target certain tax structures used by large oil and gas companies, particularly involving overseas branch profits.
Additional Support Measures
Alongside the tax announcements, the government also confirmed:
- Free bus travel for under-16s in England during August
- Additional support for energy-intensive industries
- Further energy bill support measures expected later this year
What this means for your business
Most of the measures are temporary and designed to provide short-term cost-of-living support.
However, businesses should review:
- Mileage reimbursement policies
- Pricing implications for VAT-affected sectors
- Potential supply chain impacts from tariff reductions
We will continue monitoring further details and implementation guidance as they are released.
If you would like to discuss how these tax announcements may affect you or your business, please do not hesitate to contact us.
The content displayed is correct as of 22 May 2026. We cannot take responsibility for any action taken or not taken from this document alone. Please contact us for personalised advice.
