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Motability scheme is changing today with mileage allowance slashed for new leases

Motability is a scheme that allows disabled people to swap their qualifying mobility allowance to lease a new car, scooter, or powered wheelchair

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Motability is available to some people on PIP and other benefits(Image: GETTY)

Major changes to the Motability scheme are being introduced for new leases from today after the company warned it needs to offset tax charges.

Motability is a scheme that allows disabled people to swap their qualifying mobility allowance to lease a new car, scooter, or powered wheelchair.

But under changes announced in the autumn Budget last November, it was confirmed that VAT and Insurance Premium tax will now apply to most new leases ordered from July 1, 2026.

Motability estimates this will cost its business 300million in additional taxes, and said it has had to offset this by introducing changes to its mileage allowances.

Starting today, new contracts will include a mileage allowance of 10,000 miles a year, down from 20,000 miles. After this, they will incur a 25p charge on every additional mile driven, up from 5p a mile.

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The number of tyre replacements you are allowed has also been reduced from eight to six, over a three-year lease. For a five-year WAV lease you can replace up to ten tyres, with up to six for damage.

You must also now pay an admin fee and let the RAC know when you are travelling to the EU. If you have an existing Motability lease, you will not be affected by these changes until your contact ends.

There have already been significant changes to Motability over the past few months.

In April 2026, Motability introduced compulsory "Drive Smart" black boxes for vehicles where drivers under 30 or who are new to the scheme.

However, this was removed in May 2026 following backlash, with customers saying rules were confusing and the tracking app was inconsistent.

Chancellor Rachel Reeves has also removed luxury brand vehicles like BMWs and Mercedes from being available through the scheme.

To be eligible for Motability, you must receive the Higher Rate Mobility Component of Disability Living Allowance (DLA), Enhanced Rate Mobility Component of Personal Independence Payment (PIP), Armed Forces Independence Payment (AFIP), or War Pensioners' Mobility Supplement (WPMS).

Andrew Miller, chief executive at Motability Operations, the company that runs the Motability scheme, said: Tax changes announced in the UK Governments Autumn Budget have significantly increased the cost of running the Motability scheme.

While we have had to make difficult decisions in response, the changes we are making mean the scheme can keep disabled people connected to freedom and independence now and in the future.

The scheme continues to offer value for disabled people, including cars with no advance payment in addition to their weekly payments.

Ministers hope to save some 1billion by 2030 through the Motability reforms.

Work and Pensions Secretary Pat McFadden said: Todays changes are driven by the fairness that underpins this Government fairness for the taxpayer, fairness for disabled people and fairness for the country.

Were saving 1 billion of taxpayer money by removing VAT relief from some new Motability leases whilst ensuring the scheme still supports disabled peoples mobility and independence.

Were building a fair welfare system and an economy that works for everyone.

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