Armed Conflict: Iran

The Chancellor set out a package of measures on 21 May to support families and businesses. This covered:

• A package to support motorists including through changes to fuel duty, a 12-month Vehicle Excise Duty (VED) holiday for the majority of HGVs and tax-free mileage rates, estimated to cost approximately £600 million in total across the forecast period.
• A temporary reduced rate of VAT on children’s meals in restaurants, children’s tickets for theatres and cinemas and tickets for certain family attractions, estimated to cost approximately £300 million in 2026-27.
• £350m in sectoral support for critical chemicals and £120m for ceramics over the forecast period; and over £100m in support for the bus sector this year, including funding free travel for children aged 5-15 on local buses throughout August.

The government is also engaging businesses on a tariffs suspension package. The precise fiscal impact of that package depends on final decisions following said process of business engagement.

The government also announced reforms to the Foreign Branch Exemption regime, which are expected to raise hundreds of millions a year and fund the package of measures set out above.

The costings of measures will be subject to certification by the OBR and set out in the next forecast in the usual way. The OBR will also publish an updated inflation and real household disposable income outlook, reflecting the impact of these and other policy measures announced alongside or before that forecast.