Chancellor to cut tariffs on some food and freeze fuel duty to give families 'breathing space'

Making higher tax-free mileage rates permanent and the removal of import taxes on some food items are among the measures being announced ahead of Wednesday's Budget.

The BBC understands the government will also freeze fuel duty again in the Budget, while the Times reports, external it may also slow the pace of pay increases for younger workers on the minimum wage.

The series of small announcements is part of Chancellor John Healey's pledge to give families what he is calling "breathing space" with the cost of living.

Speaking ahead of his first Budget, Healey said that the ongoing wars in Iran and Ukraine had "hit families here at home through higher everyday costs".

Business Secretary Jonathan Reynolds defended the government's plan to remove tariffs from 100 food items, which it calculates could save households up to £21 per year - or 40p a week - when combined with existing tariff suspensions that were introduced in June.

"We're not going to say it is everything," he told the BBC, but taken alongside the changes implemented in the summer on goods such as pasta, fruit juice and tuna, he said it would save around £500m a year.

• Making permanent a 55p per mile tax-free mileage rate for those driving up to 10,000 miles for work, with the rate rising from 25p per mile to 35p above that

• Giving two weeks of paternity pay to self-employed fathers, who have previously missed out on payments of up to £194 a week for the period

The government will also freeze fuel duty again in the Budget, the BBC understands. The 5p duty discount is also set to continue. That discount was first introduced in 2022, and was due to last 12 months, but has been extended ever since.

Healey will announce the new National Minimum Wage for 18 to 20-year-olds on Wednesday as well as the National Living Wage for those aged 21 and over.

The business secretary would not comment on the new pay rates but appeared to confirm the pace of rises would slow for people on the National Minimum Wage.

"Of course, you want not just good wages but good work, " he added. "It is a balance of making sure the pressures on the labour market are taken into account."

The Times has reported that the National Minimum Wage is likely to rise by 3.9% from £10.85 an hour to around £11.27. It is far below the 26% increase the Labour government has put in place since returning to power in 2024.

Even after the reported rise, the rate remains below the National Living Wage which is currently £12.71 an hour. It is set to rise by 3.9% to £13.20, the Times said.

"Twenty year-old care workers, teaching assistants and security guards do the same work as their older colleagues," she said. "They don't pay less in the supermarket or at the petrol pump. They must be paid equally."

• Garlic

• Boiled sweets

• Throat pastilles and cough drops

• Fertilisers

The government said removing tariffs on fertiliser aimed to help farmers, while changes to import levies on kerosene is targetted at households that rely on heating oil.

A tariff is an import duty paid by domestic businesses buying products from overseas.

Asked why the government was making it cheaper to buy goods from abroad rather than cutting business costs for UK firms, Reynolds said: "Where you can make a reduction in the cost of importing goods into the UK, when you think you can balance that with your domestic economic interests, that's a decision we will take."

But Balwinder Dhoot, director of sustainability and growth at the Food and Drink Federation (FDF), said: "It's more expensive to make food and drink here in the UK than in many of our close neighbours, as businesses face such high energy costs."

Shadow chancellor Andrew Griffith said: "Shoppers face rising costs at the till and families are struggling to make ends meet, but Burnham's plan is cheaper gherkins. This is an insult to families hammered by Labour's tax rises."