Rachel Reeves confirms new 20p-per-mile payment for workers who cycle to work

Under the updated system, workers using their own cars for business travel will now be able to claim tax relief on 55p per mile for the first 10,000 miles driven during the tax year, up from the previous 45p rate.

However, cyclists travelling for work will continue to receive 20p per mile regardless of distance travelled.

The mileage payments apply only to journeys carried out as part of work, rather than normal commuting to and from a workplace, Birmingham Live reported.

That means employees such as care workers, delivery staff or workers travelling between sites may be eligible to claim the allowance.

Employers can reimburse staff through what is known as an Approved Mileage Allowance Payment scheme, allowing workers to receive payments without paying tax or National Insurance on the money.

The cycling mileage rate is designed to help cover maintenance and running costs associated with using a bicycle for work journeys.

The announcement formed part of Reeves’ wider “Great British Summer Savings” package, which also included measures aimed at reducing costs for families during the school holidays.

Those plans include VAT cuts on some family attractions and children’s meals, alongside free bus travel for under-16s in England during August.

Businesses across the tourism and leisure industry welcomed the measures.

Fiona Eastwood, chief executive of Merlin Entertainments, said: “This is great news for the UK’s visitor economy and for families planning trips this summer.

“As the season gets underway, this timely move from the Government will make it easier for people to get out, explore and create memorable moments together at destinations across the country.”

She added that Merlin would apply the VAT reduction to admission tickets and children’s meals across its UK attractions.

However, some activities remain excluded from the VAT changes, including services already covered by exemptions or zero-rating rules such as not-for-profit museums, zoos and theatres.

The Government said the package was intended to ease pressure on household finances while encouraging domestic tourism and more environmentally friendly transport options.