"Motability" Scheme and the New 2026 Changes

The Motability Scheme lets disabled people in the UK exchange their mobility allowance for a new car on a lease that includes insurance, servicing, maintenance and breakdown cover.

Key Changes from 1 July 2026 (New Orders Only)

These apply across the UK except for customers receiving allowances from Social Security Scotland:

Mileage allowance reduced to 10,000 miles per year (30,000 miles over a standard three-year lease; 50,000 miles over a five-year Wheelchair Accessible Vehicle lease).
Excess mileage fee increased to 25p per mile (including VAT).
Tyre replacements limited to six tyres over a three-year lease (up to four for accidental damage) or ten tyres over a five-year WAV lease (up to six for damage).
EU travel now requires an admin fee and advance notification to the RAC for breakdown cover.

Why These Changes?

The UK Government’s 2025 Autumn Budget introduced VAT and Insurance Premium Tax on most new leases. Without adjustments, the average cost of a lease would rise by around £1,100. The changes keep the Scheme affordable while protecting the all-inclusive package.

Here are the key changes to the Motability Scheme effective 1 July 2026 for new orders only (existing leases remain unaffected):

Mileage allowance reduced to 10,000 miles/year (30,000 miles over a 3-year lease; 50,000 miles for 5-year Wheelchair Accessible Vehicles).
Excess mileage fee increased to 25p per mile (including VAT).
Tyre replacement limits:
- 6 tyres over 3 years (4 for damage) for standard leases.
- 10 tyres over 5 years (6 for damage) for WAVs.
New charges for EU travel: An admin fee and RAC notification are required when taking vehicles abroad.

Why these changes?

The UK Government’s 2025 Autumn Budget introduced VAT on Advance Payments and Insurance Premium Tax (IPT) on most leases, increasing costs by ~£1,100 per new lease. To maintain affordability, the Scheme is absorbing some costs while keeping core benefits (insurance, servicing, breakdown cover) intact.

Additional context:

Premium brands (e.g., BMW, Mercedes-Benz) were removed from the Scheme in 2025 to focus on practical, affordable vehicles.
Scotland operates under a separate agreement (AVES), so changes for Scottish customers are still being finalised.
Existing customers: No changes to current leases.
New vehicle options remain strong, with ~850 cars from 30+ manufacturers, including 40+ with £0 Advance Payment.

🗓️ Timeline of Changes

April 2026 — Drive Smart Expansion

Drive Smart (telematics monitoring) now applies to all new Scheme customers, not just those under 30
Tracks driving frequency, timing, journey length, and behaviour
No opt-out available
Repeated low scores may affect future Scheme access

July 2026 — Core Scheme Changes

The following apply to new orders placed on or after 1 July 2026:

Change	New Policy
Annual mileage allowance	Reduced to 10,000 miles/year (down from 20,000)
Excess mileage fee	Increased to 25p per mile (VAT inclusive)
Tyre replacement	Max 6 tyres over 3-year lease (4 for damage); 10 tyres for 5-year WAV leases (6 for damage)
EU breakdown cover	Admin fee introduced; must notify RAC when travelling to EU

💰 Why These Changes?

The Government's Autumn Budget 2025 announced:

VAT will apply to Advance Payments from July 2026
Insurance Premium Tax (IPT) will be added to most leases

Without changes, the average lease cost would rise by approximately £1,100. Motability is absorbing costs where possible by adjusting the Scheme structure.

✅ What's NOT Changing

Your current lease terms remain unchanged — these only affect new orders from July 2026
Core package protected: Insurance, servicing, maintenance, and breakdown cover remain included
Eligibility unchanged — still based on qualifying mobility allowances
WAVs and adaptations continue to benefit from VAT and IPT concessions
Scotland exception: Customers receiving allowances from Social Security Scotland are not currently affected by the July 2026 changes

🚗 Other Notable Updates

Premium brands removed: BMW, Mercedes-Benz (excluding Sprinter WAV), Audi, and Lexus are no longer available — the Scheme is refocusing on practical, affordable mobility
Lease extensions: Long extensions no longer routinely offered; shorter, more limited extensions now standard

📌 What Should You Do?

Current leaseholders: Nothing — your terms remain the same
Considering joining: You may want to place orders before July 2026 to avoid the new mileage caps and fees
High-mileage drivers: The 10,000-mile cap may significantly impact you — factor in the 25p/mile excess charge

Would you like more details on how any of these changes might affect your specific situation?

What Stays the Same

Existing leases remain unchanged. Insurance, servicing, maintenance and UK breakdown cover continue. Wheelchair-adapted vehicles keep their zero-rated VAT treatment.

Scotland Note

Customers using the Accessible Vehicle and Equipment Scheme (AVES) are unaffected for now; discussions with the Scottish Government are ongoing.

These updates only affect new orders placed on or after 1 July 2026.

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Updates

"Motability" Scheme and the New 2026 Changes