A couple of weeks ago, the Chancellor announced a package of measures designed to ease some of the pressure many of us are feeling right now with the cost of living.
At first glance, some of these changes might seem quite small. But we think some of the announced measures need your attention as a business owner.
So, let’s take a look at what’s actually been announced and what it means in simple terms.
The “Great British Summer Savings” Package
At the centre of the announcement is a £300 million initiative called the “Great British Summer Savings” scheme.
The aim is straightforward: to ease some of the day‑to‑day pressures families face, particularly over the summer, when spending often increases.
But as with most things, the detail is where it becomes interesting.
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VAT Cut on Days Out and Children’s Meals
One of the most discussed measures is the temporary reduction in VAT from 20% to 5% for certain activities. Does this remind you of the pandemic days? We had a similar incentive during COVID-19. The key takeaway is to maintain clear records for HM Revenue and Customs (HMRC), as they may come to check your information years later.
On this occasion, the VAT cut applies between 25 June and 1 September, covering:
- entry to attractions like theme parks, zoos, and museums
- cinemas and entertainment venues like theatres, exhibitions and shows.
- children’s meals in restaurants
The idea is straightforward: make it more affordable for families to spend quality time together during the summer holidays. For businesses in the hospitality and leisure sectors, this initiative also aims to increase foot traffic during a crucial trading period.
However, one might wonder why the change is set for September 1st when VAT quarters typically end at the end of each month. This could lead to administrative challenges with your VAT returns, so if you’re operating in this area, it’s essential to plan ahead.
It’s a big ask, and if you are going to pass the VAT cut, please ensure you understand the rules in detail. This brief from HMRC is quite useful.
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Free Bus Travel for Children
Another practical step is free bus travel for children aged 5 to 15 throughout August in England.
This one is quite straightforward.
If you’ve got children, transport costs can add up quickly, especially during school holidays. Removing that cost, even for a month, helps families move around more freely and affordably.
For local businesses, it also encourages more people to get out and about.
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The Mileage Rate Increase (Which Caught Many by Surprise)
One change that didn’t get as much attention but arguably has a bigger impact for some is the increase in the tax‑free mileage rate.
The approved rate has gone up from:
- 45p to 55p per mile (for the first 10,000 miles)
And importantly, it’s been backdated to April, i.e. the beginning of the new tax year.
This means:
- employees and business owners can claim more per mile
- employers may need to revisit claims already submitted
- individuals may be able to claim back additional tax if they’ve been under‑reimbursed
For anyone who regularly uses their own car for work, this is one of the more meaningful changes announced.
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Fuel and Transport Support
There were also a number of transport‑related measures, including:
- an extension of the fuel duty freeze
- a significant cut in duty on red diesel
- and a 1‑year road tax holiday for hauliers
These are more targeted, but they matter in sectors like logistics, construction, and agriculture — where fuel costs have a direct impact on margins.
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Food Tariff Reductions
Another interesting step is the removal of import tariffs on over 100 everyday food products, including items like biscuits and dried fruit.
The aim is to bring down the cost of goods at supermarket level.
In theory, that should reduce prices over time, although, as always, it depends on how much of that saving flows through to consumers.
But What About Energy Bills?
Perhaps the most notable part of the announcement is what wasn’t included.
Despite an expected rise in energy costs (around £200 annually per household) due to global pressures, there were:
- no new winter bailouts
- no direct cash payments
Instead, the government pointed to existing measures, including previous support schemes, and confirmed that contingency planning is in place if conditions worsen.
In other words, there is recognition of the issue, but no new immediate intervention.
So, What Does This All Mean in Practice?
For many people, this package will feel like a mix of:
- helpful short‑term relief
- practical, targeted support
- but not a complete solution
And that’s probably the right way to view it.
These measures:
- won’t transform finances overnight
- but they do reduce pressure in specific areas
- and give a bit more breathing room, particularly over the summer
A Final Thought for Business Owners
If you’re running a business, there are a couple of key takeaways:
- Review mileage policies because the increase could impact reimbursements and claims
- The VAT reduction may influence customer behaviour, and you need to consider the administration involved ahead of the summer
- And perhaps most importantly, use these moments as a prompt to review your numbers.
Because while government changes can help at the margins, the biggest impact on your finances will always come from how your business is structured, managed, and planned moving forward.
Final Thoughts
This latest package is clearly designed to alleviate some of the immediate pressures that families and businesses are facing. It is targeted, temporary, and practical in many ways.
However, it also highlights a broader reality: we are still navigating a period of rising costs, uncertainty, and ongoing change.
While it’s beneficial to take advantage of these measures, it’s equally important to maintain a focus on the bigger picture. This means planning ahead, reviewing your current position, and ensuring that your business is as resilient as possible.
We are here to help and are serious about you and your ambitions. If you would like a chat about your business finance or the pressures you may be feeling, please contact your normal manager in the first instance.
If you are not yet working us, here’s more on who we are.
You can find the full details of the Chancellor’s announcements in the Commons on 21st May here