Since Wednesday 1st July 2026, new Motability Scheme leases have worked a little differently. Government tax changes have introduced VAT and Insurance Premium Tax to most new leases, and the Scheme has adjusted its lease package in response.
Here’s what’s changed, who it affects and what stays the same.
Why the Scheme Has Changed
For many years, the Scheme benefitted from tax reliefs that helped keep lease costs down. The Autumn Budget restricted those reliefs, adding new costs to running the Scheme.
To keep the Scheme sustainable, its operator has made changes it says are designed to protect the most important parts of your lease while reducing the impact of the tax changes.
VAT on Advance Payments
An Advance Payment is the one-off upfront amount you pay if you choose a car that costs more than your mobility allowance covers. For most new leases, Advance Payments now include VAT at 20%.
This has pushed some Advance Payments up, so it’s worth checking current prices before you decide. The latest list still has over 60 cars with no or low Advance Payment, and you can see our picks in the Motability Scheme price list 2026 guide.
Most Wheelchair Accessible Vehicle (WAV) customers benefit from VAT relief, so WAV prices are shown at 0% VAT.
Insurance Premium Tax
Insurance is still included in every lease, covering up to three named drivers. However, Insurance Premium Tax (IPT) at the standard 12% rate now applies to the insurance on most new leases.
Vehicles that are substantially and permanently adapted for wheelchair or stretcher users remain exempt.
Mileage Allowance
New three-year leases now include 30,000 miles, which works out at 10,000 miles a year. New five-year WAV leases include 50,000 miles.
The Scheme says customers drive around 7,500 miles a year on average, so the new allowance covers most people comfortably. If you need more, you can pay for extra mileage at 25p per mile, including VAT, and support may be available in exceptional circumstances.
Tyre Replacements
Replacement tyres are still included, now within fair use limits. A new three-year lease includes six tyres, down from eight, and a new five-year WAV lease includes ten.
Driving Abroad
EU breakdown cover is no longer included free of charge on new leases. You’ll need a VE103 certificate before taking your car outside the UK, which carries a £22 admin fee, and you can still arrange it through the RAC.
What Hasn’t Changed
The core of the all-inclusive package stays the same. Every new lease still includes:
- Insurance for up to three named drivers
- Servicing and maintenance
- UK breakdown cover
- Support from the Scheme’s customer team
If You Already Have a Lease
Nothing changes for your current lease. The new terms only apply when you place an order for your next vehicle.
If your renewal is coming up, it’s worth looking at your options early so you know what the new terms mean for the car you’d like next.
Customers in Scotland
If you receive your allowance from Social Security Scotland, your lease runs through the Accessible Vehicles and Equipment Scheme (AVES). The new lease terms now apply to AVES customers too, although orders placed before Tuesday 1st September 2026 keep the terms that applied when they ordered.
Customers in the most rural areas and on islands may qualify for extra mileage support. You can read more on the Motability Scheme changes page.
Planning Your Next Car
If keeping upfront costs down is a priority, our guides to Motability Scheme cars under £750 and electric cars under £1,000 Advance Payment are a good place to start.
Our Motability Scheme specialists can explain how the changes affect the cars you’re considering. Book an appointment at your nearest Vertu dealership, or browse all Motability Scheme cars online.
- Motability