Tax Planning
Cost-of-Living Reliefs: Fuel, Tariffs, and Mileage in UK Tax Measures
Recent UK policy changes offer reliefs in fuel duty, vehicle mileage rates, and import tariffs—here’s a practical breakdown of who benefits and how to claim.
By NomadicTax Research Team • 5-8 min read • June 8, 2026
## Summary of Reliefs Announced
- **Fuel duty cut** of **5p per litre** extended until **31 December 2026** for petrol and diesel.([kpmg.com](https://kpmg.com/us/en/taxnewsflash/news/2026/05/tnf-uk-temporary-reductions-in-transport-related-taxes-guidance-on-taxation-of-ecosystem-services-consultation-on-changes-to-plastic-packaging-tax.html?utm_source=openai))
- **Red diesel duty** reduced from **10.18p to 6.48p per litre**, in effect from **15 June 2026** to **31 December 2026**.([kpmg.com](https://kpmg.com/us/en/taxnewsflash/news/2026/05/tnf-uk-temporary-reductions-in-transport-related-taxes-guidance-on-taxation-of-ecosystem-services-consultation-on-changes-to-plastic-packaging-tax.html?utm_source=openai))
- **Mileage allowance rates** increased for 2026/27: 55p per mile for first 10,000 miles; 25p per mile thereafter. Backdated to 6 April 2026.([kpmg.com](https://kpmg.com/us/en/taxnewsflash/news/2026/05/tnf-uk-temporary-reductions-in-transport-related-taxes-guidance-on-taxation-of-ecosystem-services-consultation-on-changes-to-plastic-packaging-tax.html?utm_source=openai))
- Temporary **VAT cuts** to children’s meals, tickets, and family attractions — effective **25 June to 1 September 2026**.([kpmg.com](https://kpmg.com/us/en/taxnewsflash/news/2026/05/tnf-uk-temporary-reductions-in-transport-related-taxes-guidance-on-taxation-of-ecosystem-services-consultation-on-changes-to-plastic-packaging-tax.html?utm_source=openai))
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## Who benefits & how it works in practice
| Stakeholder | What you gain |
|---|---|
| Motorists | Lower pump prices due to frozen main fuel duty and extended cut. Even if you don’t own a business vehicle, general inflation on transport reduced.|
| Companies / Self-employed travellers | Higher mileage rates mean more deductible expenses if using your vehicle for work. For example, if doing 6,000 business miles/year, expect savings of around £120 based on new rates.([kpmg.com](https://kpmg.com/us/en/taxnewsflash/news/2026/05/tnf-uk-temporary-reductions-in-transport-related-taxes-guidance-on-taxation-of-ecosystem-services-consultation-on-changes-to-plastic-packaging-tax.html?utm_source=openai))|
| Agricultural sector & hauliers | Reduced red diesel duty and relief via VED holiday give substantial savings.|
| Leisure sector & consumers | VAT cuts on family outings reduce cost for tickets, meals during the summer period. |
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## How to claim & document these reliefs
- For business owners: ensure mileage claims are logged precisely (date, purpose, miles) to support deductions against increased rates.
- If using red diesel or rebated biodiesel, maintain records of usage and invoices; ensure correct duty rate is applied after 15 June.|
- At VAT registration, note the temporary reduced rates for applicable supplies during specified summer dates; then revert when rate returns to normal.|
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## Long-term considerations
- Expect fuel duty rates to **incrementally increase starting September 2026**, per Budget 2025 plans: 1p Sept, 2p Dec, 2p March 2027.([assets.publishing.service.gov.uk](https://assets.publishing.service.gov.uk/media/6926e0849c1eda2cdf034098/Budget_2025_policy_costings_-_revised.pdf?utm_source=openai))
- Tariff suspensions currently under public consultation: list of 125 everyday products. Final outcome may affect cost base for importers and retailers.([gov.uk](https://www.gov.uk/government/news/millions-to-benefit-from-lower-travel-and-food-costs?utm_source=openai))
Relief policies like these are intended to provide immediate breathing space for households and small businesses. Knowing the dates, thresholds, and documentation needed can unlock real savings.