MoneyJim McMahonThe Chancellor announced a 10p per mile increase in tax-free mileage rates, up from the current rate of 45p and backdated to April 202610:34, 22 May 2026People who have to use their car for work have been handed a boost after Rachel Reeves announced an increase in tax-free mileage rates.‌The Chancellor announced a 10p per mile increase in tax-free mileage rates, up from the current rate of 45p and backdated to April 2026.‌This mileage allowance is designed to cover your costs if you have to use your personal car for business reasons.‌For example, if you are a carer and you have to drive to different houses to care for different people. It does not cover the cost of your commute if you are just driving to your place of work.You can either claim these expenses back directly from your employer or claim tax relief from HMRC. If you are employed, you would normally need to submit an expense claim to your employer.‌If your employer pays you less than the full rate, you can claim tax relief on the difference.The new 55p per mile rate applies to the first 10,000 miles driven in a tax year in a car or van - after this, it drops to 25p per mile.For motorbikes and bicycles, the rate is 24p and 20p respectively, no matter how many miles you have driven. The rules are different if you have a company car.‌The Chancellor told MPs: “Having heard from (Labour former minister Jim McMahon) and the trade union Unison, I can today announce a 10p per mile increase in tax-free mileage rates backdated to April 2026 – benefiting those who need to drive for work, from care workers to plumbers.”Martin Lewis hailed the change and said: "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."‌Unison general secretary Andrea Egan said: “This simple measure will provide immediate help for countless frontline workers in public services.“Particularly at a time when living costs are going through the roof once again. People who need their own cars for work have been left thousands of pounds out of pocket for far too many years.“Unison has campaigned hard for this long overdue change. It’s good to know the Chancellor has listened to the concerns of staff penalised by frozen rates.Article continues below“There’s still more to do to ensure no-one is losing out and the union will continue to campaign for more over the coming months.”Choose Daily Mirror as a 'Preferred Source' on Google News for quick access to the news you value.‌UnisonJim McMahonPublic servicesPolitics