The Motability Scheme will be changing from Wednesday 1st July 2026 as the UK Government has announced tax changes. This will involve VAT and Insurance Premium Tax being added onto most new leases, meaning it will cost more to deliver the scheme.
The Motability Scheme are making these changes to protect customers and to keep the scheme sustainable for the long term.
These changes will apply for new orders on or after Wednesday 1st July 2026.
| Before 1 July 2026 | Before 1 July 2026 | On / after 1 July 2026 | |
| Handover Date | Before 1 July 2026 | On / after 1 July 2026 | On / after 1 July 2026 |
| VAT on Advance Payments (APs) | Zero rate | Standard Rate (our price freeze mean the AP price is locked at the time of submitting the application. This will not increase for customers due to VAT Changes.) | Standard Rate |
VAT on some in-life costs (including excess mileage, early termination fee, asset recovery charge, fair usage charge | Zero Rate | Standard Rate | Standard Rate |
| Mileage | 20,000 per year / 60,000 for a 3-year lease | 20,000 per year / 60,000 for a 3-year lease | 10,000 per year / 30,000 for a 3-year lease |
| Excess Mileage Charge | 5p per mile (zero rate VAT) | 6p per mile (inclusive of VAT) | 25p per mile (inclusive of VAT) |
| Tyres | 8 replacements for 3-year lease | 8 replacements for 3-year lease | 6 replacements for 3-year lease |
| EU Breakdown Cover | Included free of charge | Included free of charge | Available with an admin fee |
Mileage allowance:
Orders that are placed on or after 1 July 2026 will include:
- 30,000 miles for a new three year lease
- 50,000 miles for a new five year lease
If you already have a lease, nothing for you will change until you come to sign a new lease.
Mileage is one of the biggest costs in running the Motability Scheme, when they know how many miles a vehicle will travel, they can plan costs more accurately. Their main aim to keep the Scheme affordable, ensure it is fair for all customer and to protect the Scheme for years to come.
If you need to drive more than the allowance given, you can for extra mileage. For orders placed on 1 July or after, excess mileage will be charged at:
- 25p per mile including standard rate VAT
- 21p per mile if your lease benefits from VAT concessions
They understand that some customers may need to drive more than the mileage allowance included in the lease contracts, they will be introducing an exceptions process for very limited situations, and will share an update before 1 July 2026.
Tyre Replacement:
On average Motability Scheme customers replace two or fewer tyres during their three year lease.
Tyre replacement is still included as part of your lease, as long as it is within fair use and you can have the below number of tyres within your lease.
These new limits are designed to cover what people need most, The Motability Scheme are also reducing the number of miles included in the lease, so it makes sense to update tyre replacement at the same time.
| Lease Term | No. of Tyres |
| 3 Year Lease | Replace up to six tyres. Up to four of these can be for damage |
| 5 Year Lease | Replace up to ten tyres. Up to six of these can be for damage |
If you reach the limit, the Motability Scheme will explain your options clearly, as their focus is to help you stay mobile.
If you currently have a lease, or apply before 1 July 2026, this admin fee will not impact you.
EU Breakdown Cover:
If you plan on travelling abroad in your Motability Scheme vehicle you will need a VE103 certificate before you go, and an admin fee for the certificate will apply to all new orders. This is still available to get from the RAC.
The VE103 certificate is needed to travel abroad as you are not the registered owner of the vehicle, so it confirms that you have permission to take the vehicle outside of the UK.
If you currently have a lease, or apply before 1 July 2026, this admin fee will not impact you.