Cost of living support latest: Reeves cuts VAT for families and suspends 100 food tariffs in new support package

It has been 15 years since the tax-free mileage rate was last increased from 40p to 45p by a chancellor, George Osborne.

Rachel Reeves’s 10p increase, due to April 2026, is a huge boost for those who use their vehicles for business, especially a win for white minibus drivers. It will help offset the costs from taxes.

The Chancellor has already extended the fuel duty cut until the end of the year and it comes amid concerns that oil and gas prices are rising sharply along with ongoing uncertainty over the war in the Middle East.

This was the biggest benefit of the measures, but there was more to be done to cope with household bills and teenagers’ expenses.

Ms Reeves’ plans for free bus travel over the summer holidays have already been followed, with her announcement that tariffs will be scrapped on key 100 food items, including biscuits and baked beans, among other things.

Additionally, a VAT discount of up to 5 percent was made on tickets for summer events and children’s meals.

This would give families some help with household expenses, especially during the summer holidays, and boost the UK’s domestic tourism industry.

But the big ticket items discussed were missing. The Chancellor has avoided a battle with supermarkets with a proposal to impose price ceilings on essentials such as bread, milk and eggs.

He also eschewed a package that would cap energy bills, a measure that collapsed Liz Truss’s government, because he almost certainly couldn’t afford it.

The cost of Rachel Reeves’s “Great British Summer Savings” program is estimated to be around £300 million, the Treasury has said.

The final costs of all measures will be detailed in the next budget following scoring by the Office for Budget Responsibility, the ministry said.

The government has said it expects businesses to pass on VAT savings from the 20 per cent to 5 per cent cut on summer events to customers.

HMRC has published guidance for businesses on how to implement the scheme.

The cost of Rachel Reeves’s “Great British Summer Savings” program is estimated to be around £300 million, the Treasury has said.

The final costs of all measures will be detailed in the next budget following scoring by the Office for Budget Responsibility, the ministry said.

The government has said it expects businesses to pass on VAT savings from the 20 per cent to 5 per cent cut on summer events to customers.

HMRC has published guidance for businesses on how to implement the scheme.

Rachel Reeves said oil and gas companies operating abroad would pay for cost-of-living support by changing the way they are taxed.

He told MPs: “Today I am introducing certain changes to the taxation of foreign branch profits, changing the way companies are taxed in relation to their foreign operations.

“Some oil and gas groups currently operating abroad through foreign subsidiaries have structured their tax affairs so that they pay little or no corporation tax on their energy trading profits in the UK.

“Today we are putting an end to this practice.

“We expect these reforms to raise hundreds of millions of pounds a year and fund the package of measures set out today, with costs confirmed by the OBR (Office for Budget Responsibility) forecast as usual.”

Rachel Reeves has announced that there will be a temporary reduction in VAT at certain tourist attractions during the summer holidays.

It is planned to reduce VAT from 20 percent to 5 percent for activities such as fairs, museums and children’s meals in restaurants and cafes.

He told the House of Commons: “I recognize that what is important for families is not just to get by, but to be able to spend time together without worrying about the next bill.

“That’s why I’m launching the Great British Summer Savings Scheme to help families and support our hospitality industry.

“So today I can announce that the VAT rate on summer events during the summer holidays has been temporarily reduced from 20 percent to 5 percent.

“This will apply to ticket prices for both adults and children, covering attractions such as fairs, theme parks, zoos and museums.”

This includes cinema, concert, soft play and theater tickets and will be valid from 25 June until the end of the holiday on 1 September.

Rachel Reeves has confirmed she has made a U-turn on a planned increase in fuel duty as a result of the war in Iran.

He told the House of Commons: “I have already extended the 5p cut to fuel duty twice since the election and I can confirm today that there will be no increase in fuel duty this year, recognizing the pressure the war is putting on fuel prices.”

It also announced a 10p per mile tax-free increase extending to April 2026, which will support people such as maintenance workers and plumbers who are regularly on the road.

Among the measures to be announced, the chancellor has given a £350 million lifeline to the chemicals sector, including ceramics manufacturers.

It is thought that this money will be targeted at companies classified as infrastructure vital to national resilience, due to concerns about the heavy industrial sector.

Rachel Reeves began her speech in the House of Commons by saying the Labor government had the “right economic plan” before introducing a raft of measures to help with the cost of living crisis.

He told MPs: “Interest rates have been cut six times since the election and real wages have risen, and yesterday the ONS confirmed inflation fell faster than expected in April.

“We have the right economic plan, but the conflict in the Middle East poses a significant challenge to the world economy, including our own.”

“I did not shy away from my criticism of the war, I believe this was a mistake.”

Chancellor Rachel Reeves has begun announcing measures to combat the current cost of living crisis, due in part to the impact of the Iran war on the UK.