Stop proposed changes to the Motability Scheme

The recent budget has announced taxes on advanced payments and a decrease in mileage allowances. We believe this is unfair to the most vulnerable in society and could affect their independence.

The Motability Scheme is a lifeline for many disabled people and families, supporting their independence by enabling them to lease a car, a wheelchair accessible vehicle, scooter or powered wheelchair in exchange for an eligible disability benefit allowance.

The Government and Motability have worked in partnership to develop a suite of reforms which strikes the right balance between delivering a key service for disabled people and fairness to the taxpayer, saving over £1 billion by financial year 2030/31. These reforms will not affect eligibility for the Motability Scheme or disability benefits.

The VAT relief for Advanced Payments – a one-off payment made to lease more expensive vehicles – will be removed and Insurance Premium Tax (IPT) will apply to leases at the standard rate, bringing tax treatment in line with commercial leasing firms. These changes will only apply to customers taking out new leases with Motability and will not apply to current leases or to wheelchair accessible vehicles in recognition of the additional costs associated with these vehicles. VAT reliefs on weekly lease costs and vehicle resale will remain in place.

Motability has also confirmed it will continue to offer a broad range of vehicles available without an Advance Payment, ensuring that people can access vehicles suited to their needs, whether that’s a larger vehicle or extra boot space to carry wheelchairs, using only their disability benefit.

On 26 March 2026, Motability announced changes to the leasing package that will affect new leases taken out from 1 July 2026. For new leases, mileage will be 10,000 miles a year. This is consistent with standard mileage allowances for car leases, and three out of four current customers drive fewer than 10,000 miles a year. Motability recognises that some customers may need to drive more miles for a variety of reasons. They will be introducing an exceptions process for very limited situations and will share an update before 1 July.

Standard leases will continue to include insurance, servicing, maintenance and breakdown cover, protecting the core package of support available to customers.

In determining these changes, Motability have taken careful steps to ensure the Scheme remains good value and accessible for disabled people. This includes engaging with Scheme customers about prospective changes, the feedback from which has informed the changes.

Department for Work and Pensions