Health and Wellbeing
What are the changes to the UK Motability Scheme in 2026?
The Motability Scheme has long been a lifeline for many disabled people in the UK. It gives access to vehicles they can use to get to work, health appointments and family events. This means independence and the chance to get about.
Following the UK Government’s Autumn Budget (November 2025), there are important changes coming in July 2026 for people with Motability leases. This article explains what’s changing and what it could mean for you - so you can plan ahead.
Key takeaways:
- The changes are designed to bring the scheme more in line with general tax rules and help it run long-term.
- For vehicles designed (or largely adapted) for people in wheelchairs - no changes are being brought in.
What is the Motability Scheme?
The charity-run Motability Scheme lets eligible people in the UK exchange their mobility allowance for a leased vehicle, a standard car, a wheelchair-accessible vehicle (WAV), a scooter or a powered wheelchair. It depends on individual needs.
The vehicle is chosen by the person who will be using it, ensuring it suits their lifestyle and mobility needs. Motability leases typically include insurance, servicing and maintenance, repairs and full RAC breakdown support, helping to make motoring simpler.
Overview: 2026 changes to the Motability Scheme in simple terms
Two major tax reliefs that currently help keep the scheme affordable are being altered.
1. No VAT on Advance Payments
Some Motability cars cost more than the weekly mobility allowance covers. If you choose one of these cars, you may be asked to pay an ‘Advance Payment’ - a one-off upfront amount to make up the difference.
At the moment: Advance Payments are VAT-free, which helps keep costs lower.
From July 2026 (for new leases only): Advance Payments will have 20% VAT added.
This does not affect people who choose cars with no Advance Payment, and it won’t change existing leases - only new ones starting from July 2026.
2. The Insurance Premium Tax (IPT) exemption
Motability leases include insurance as part of the package, which is one of the reasons the scheme is so popular and straightforward.
At the moment: Motability insurance is exempt from Insurance Premium Tax (IPT).
From July 2026 (for new leases only): Insurance included in the lease will be charged IPT at 12%.
What this could mean for you: This doesn’t mean you’ll suddenly have to arrange or pay for insurance separately. Instead, the cost of insurance within the lease will increase slightly because of the added tax, and this may be reflected in:
- Higher Advance Payments, or
- Fewer higher-end vehicles available within the standard allowance
The bottom line
Because VAT and IPT are being introduced on new Motability leases, this is expected to increase the overall cost for new customers from July 2026. The overall goal is to generate public revenue while keeping the scheme operational. Motability and disability organisations are working to minimise the impact on new joiners.
Important points to be aware of
- If you already have a Motability lease, nothing changes until you renew.
- Wheelchair-accessible and heavily adapted vehicles remain exempt from these tax changes.
- The Motability Scheme is not ending, and eligibility rules are not changing.
- The changes that are happening are intended to keep the Motability Scheme financially sustainable for the long term, while continuing to support disabled people’s independence.
FAQs: Key changes to the Motability car scheme
Still have questions about the scheme and what will change in July? The answers to the questions below might help.
Who qualifies for the Motability Scheme?
You can join the Motability Scheme if you get the higher (enhanced) mobility part of a disability benefit.
Most people qualify through:
- Personal Independence Payment (PIP) - enhanced mobility rate, or
- Disability Living Allowance (DLA) - higher rate mobility component
If you receive one of these, you can use that money to lease a Motability car, wheelchair-accessible vehicle, scooter or powered wheelchair.
If you’re not sure which rate you get, you can check your benefit award letter or contact the DWP to confirm.
How much does a Motability car cost a month?
The monthly cost of a Motability car is effectively covered by your weekly mobility allowance (e.g., the enhanced mobility component of PIP). You may pay an Advance Payment upfront if you choose a more expensive car than your allowance covers - and from July 2026, this Advance Payment will attract VAT.
How much is the Motability allowance on PIP?
The enhanced mobility component of PIP, which you need to qualify for the Motability Scheme, was £77.05 per week (about £334 per month) as per January 2026. This is usually fully used to cover standard lease costs.
What are the proposed changes to the Motability Scheme?
From July 2026, some Motability costs will go up slightly because:
- VAT will be added to upfront payments on some cars
- Insurance included in the lease will be taxed
These changes affect new customers, not people already on the scheme.
Is the Motability Scheme stopping for PIP?
No. The Motability Scheme is not stopping for people on PIP. You can still use your mobility allowance to lease a vehicle.
What cars are being removed from the Motability Scheme?
Some premium and luxury brand vehicles (e.g., BMW, Audi, Mercedes-Benz, Lexus) were removed from the list of available models as part of changes announced by Motability ahead of the Budget to focus on cars that deliver value and practical accessibility.
Final thoughts
Change can feel daunting. Especially when it concerns something as essential as independent mobility. It’s important to remember that:
- Current leases are protected and won’t change because of these updates.
- The Motability Scheme remains available and is still committed to helping disabled people access vehicles they rely on.
- Support and clear information will continue to be provided as these changes are implemented in spring and summer 2026.
At Oak Tree Mobility, we understand how important clear, honest information is when changes like this are announced. We’re dedicated to providing the best possible advice as well as personalised mobility support equipment, from adjustable beds to rise and recliners, so you can sit comfortably at home.
If you have questions about your specific situation, speaking directly with Motability or a benefits advisor can help provide peace of mind and clarity.
See also…
- What the Disabled Facilities Grant means for you
- Accessibility in the workplace: What are the facts?
- Mobility aids for hidden disabilities
- The state of accessible public transport in the UK
