Changes to Motability Scheme

Changes to Motability Scheme

Updated 1 July 2026

New to the Motability scheme? See our main Motability scheme guide for how it works and who’s eligible.

Despite widespread concerns, the changes to the Motability scheme which were proposed in the autumn 2025 budget have now come into effect.

Here is a rundown of what’s new

VAT and Insurance Premium Tax

Until now, the Advance Payment which many people make in order to secure their preferred vehicle has been exempt from VAT. From 1st July, VAT at 20% is added to Advance Payments, unless the vehicle is wheelchair accessible (WAV). The Motability Foundation estimates that this will see the average Advance Payment increase by about £400. There are more than 30 vehicles available with no Advance Payment.

Customers will now also pay 12% Insurance Premium Tax (IPT) for the first time, unless their vehicle is a WAV.

Reduced mileage allowance

New leases are limited to 10,000 miles per year (30,000 over three years or 50,000 over a standard five year WAV lease). This reduces the mileage allowance by half, which could be a real problem for disabled people with long commutes, regular commitments to sporting or cultural activities, volunteering, or journeys to medical appointments.

It is also particularly challenging for people in rural areas without access to public transport, and the most severely disabled individuals who need their car for even the shortest journey.

Increased excess mileage fees

If you exceed your permitted mileage allowance, there is a charge of 25p per mile, up from 5p per mile. This charge also includes VAT for the first time.

Driving abroad

Scheme users who drive in Europe will need a VE103 certificate at a cost of £22 each time they travel abroad. They will need to notify the RAC.

Replacement tyres

The lease still includes replacement tyres, but not to the same extent as previously.

Standard three year leases include up to six tyres, with a maximum of four allowed for accidental damage. Five year WAV leases include up to ten tyres, maximum of six for damage.
 

Changes apply to new leases only

Existing Motability customers will not be affected by these new rules straight away. They apply to new leases only. This does, however, mean that you will be subject to them when you change your vehicle at the end of the current lease.

There are more than 915,000 people with Motability leases currently. Their vehicles are funded by handing over their higher rate PIP mobility benefit. The government hopes that the new levies will save £1 billion by 2030.
 

Need a larger vehicle with a hoist or changing space? The Motability Foundation’s Bespoke Passenger Solutions grant has been extended to 2029.

 

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Further reading and resources

More about the Motability Scheme

What about VAT on adapted vehicles?

The Independent Living section on disabled motoring is here

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