Budget 2026: Good news for drivers — but how much will you actually save?
3 November 2026 | Keepmore Finance
If you use your own vehicle for work, last week’s Budget contained some welcome news.
But before you start spending those supposed tax savings, there’s something worth understanding: a bigger tax deduction doesn’t mean HMRC is giving you that amount back.
Let’s look at what actually changes and what it means for your money.
1. Mileage allowances are increasing
If you’re self-employed and eligible to use HMRC’s simplified mileage method, the amount you can claim for business mileage has improved.
For cars and vans:
| Business mileage | 2026/27 | From April 2027 |
|---|---|---|
| First 10,000 miles | 55p per mile | 55p per mile |
| Above 10,000 miles | 25p per mile | 35p per mile |
The first 10,000-mile rate already increased from 45p to 55p in April 2026. The Budget makes that increase permanent and raises the rate for additional miles from April 2027.
That’s particularly interesting for delivery drivers, couriers and other people who cover substantial business mileage.
What does that mean in pounds?
Imagine you’re a self-employed delivery driver covering 20,000 qualifying business miles annually.
Using simplified mileage expenses:
- 2026/27: £8,000 allowable mileage expenses.
- 2027/28: £9,000 allowable mileage expenses.
- Difference: £1,000 in additional allowable expenses.
That’s £1,000 less taxable profit, assuming your circumstances and mileage remain the same.
It isn’t a £1,000 tax refund. Your actual tax saving depends on your taxable profits, tax rates and circumstances.
And there’s another important point: simplified mileage isn’t automatically your best option.
Depending on whether you own, lease or rent your vehicle, and how you’ve previously claimed vehicle costs, using actual business expenses might be more appropriate.
If you operate through a limited company, different rules apply. You cannot simply use the sole-trader simplified-expenses scheme for company accounts.
2. The Trading Allowance is increasing
From 6 April 2027, the government plans to increase the Income Tax Trading Allowance from £1,000 to £3,000.
This could be useful for people earning smaller amounts through side jobs, occasional deliveries, freelance work or other trading activities.
However, the allowance is not an automatic £3,000 tax saving.
It generally provides an alternative to deducting actual trading expenses. If your allowable costs are substantial, claiming those costs could still produce a better result.
The important thing is to compare your options rather than automatically claim the allowance.
3. Fuel duty relief continues
The government has extended the existing 5p-per-litre fuel duty cut until 1 July 2027.
For someone filling a van regularly, avoiding a planned duty increase is welcome.
But it doesn’t guarantee that diesel or petrol will become cheaper at the pump. Wholesale prices, retailers’ margins and other factors still affect what you pay.
For delivery drivers, monitoring the actual cost of running your vehicle remains just as important as monitoring your earnings.
4. Making Tax Digital isn’t going away
The Budget also announced some breathing space for people joining Making Tax Digital for Income Tax in April 2027.
Late-submission penalty points won’t apply to their first four quarterly updates for the 2027/28 tax year.
However, affected taxpayers will still need to maintain appropriate digital records and submit their required updates.
The message is simple: a temporary relaxation of penalties is not an exemption from the requirements.
So, what should you do now?
Whether you’re a delivery driver, tradesperson or another self-employed business owner, I’d suggest three things:
- Check how you claim vehicle expenses. Mileage rates might be attractive, but your current vehicle arrangements and existing tax treatment matter.
- Know your real costs. Fuel, vehicle rental, insurance, repairs and unpaid administration time can make a big difference to what you’re actually earning.
- Plan ahead. Some Budget changes apply now, others start in April 2027 or later.
A final thought from Keepmore
I’m Simon, the founder of Keepmore Finance. I’m an accountant with over 20 years’ experience managing the commercial and financial aspects of a multimillion-pound business. I’ve also run my own small business and spent around a year working as an Amazon delivery driver.
I know there’s a big difference between what a driver earns on paper and what actually ends up in their pocket.
That’s why Keepmore focuses on practical, understandable financial information — not unnecessary jargon.
Keepmore provides accountancy and financial support for self-employed people and small businesses across sectors. This article focuses on delivery drivers; the relevance of its rules and illustrations depends on your own circumstances.
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Official sources
General information, not individual tax advice. Eligibility and tax treatment depend on your circumstances. Some announced measures remain subject to legislation.