Motability Scheme Changes July 2026: What UK Drivers Need to Know?

The Motability Scheme is changing from 1 July 2026, but only for new vehicle orders placed on or after that date. If you already have a current lease, nothing will change straight away.

The biggest updates are a lower mileage allowance, higher excess mileage charges, new tyre replacement limits and a fee if you take your Motability car abroad.

Key points you need to know:

• New leases will include 10,000 miles per year
• Excess mileage will rise to 25p per mile
• Tyre replacements will be limited to six over three years
• You will need to pay an admin fee before taking your car to the EU
• Insurance, servicing, maintenance and breakdown cover will stay included
• Existing leases are not changing yet
• Most of the changes are being introduced to offset new tax costs from July 2026

What Are the Main Motability Scheme Changes Coming in July 2026?

From 1 July 2026, the Motability Scheme will introduce four confirmed changes for anyone placing a new order.

These changes are designed to reduce the extra costs caused by new tax rules, while keeping the main package in place.

The main changes are:

• The annual mileage allowance will reduce to 10,000 miles a year
• Excess mileage will increase to 25p per mile
• Tyre replacements will be capped during the lease
• There will be a new charge if you take your Motability car abroad

For a standard three-year lease, you will now receive a total allowance of 30,000 miles. If you lease a Wheelchair Accessible Vehicle, you will receive 50,000 miles across a five-year agreement.

You will also be able to replace up to six tyres over a three-year lease, including up to four damaged tyres. If you travel to the EU, you will need to contact the RAC in advance and pay an administration fee before you go.

Importantly, these changes only apply to new orders placed from 1 July 2026 onwards. If you already have a Motability vehicle, your current lease terms stay exactly the same until you renew.

Why Is the Motability Scheme Changing From July 2026?

The Motability Scheme says the July 2026 changes are necessary because the cost of running the scheme is increasing. New tax rules announced by the Government mean Motability will have to pay more on most future leases.

Instead of passing the entire cost directly on to customers, the scheme has decided to change some of the terms and conditions instead.

How Will VAT and Insurance Premium Tax Increase the Cost of the Scheme?

From July 2026, two important tax changes will apply to most new Motability leases.

The first is that VAT will be added to Advance Payments. If you choose a vehicle that costs more than your mobility allowance covers, you usually pay a one-off amount at the start of the lease.

At the moment, that payment is VAT-free. From July 2026, it will include 20% VAT.

The second change is that Insurance Premium Tax will apply to most new Motability leases. Motability insurance is currently exempt, but from July 2026 a 12% tax will be added.

In practice, this means:

• Cars with higher Advance Payments are likely to become more expensive
• Insurance costs built into the lease will also increase
• Drivers choosing premium or larger vehicles may see the biggest rises
• Vehicles with no Advance Payment are likely to be less affected

One Motability customer from Manchester said the changes have left them feeling uncertain. “I rely on my Motability car every day to get to work and hospital appointments. If the cost goes up too much, I may have to choose a smaller car that does not really meet my needs. I understand costs are rising, but it is still worrying.”

The tax changes do not affect the part of your lease that is paid directly through your qualifying benefit. They mainly affect any extra amount you pay yourself and the insurance included within the package. Wheelchair Accessible Vehicles and vehicles permanently adapted for wheelchair users will remain exempt from the new taxes.

Why Has Motability Decided Not to Pass the Full Cost on to Customers?

Motability says it looked at several different ways to deal with the extra tax costs. According to the organisation, simply adding the full increase to every lease would have made the scheme too expensive for many customers.

Instead, Motability has chosen to keep the parts of the package that most people rely on every day, including:

• Insurance for up to three drivers
• Servicing and maintenance
• Breakdown cover
• Customer support

To protect those features, the organisation has decided to reduce costs elsewhere. That is why mileage limits, tyre replacements and overseas travel rules are changing.

Andrew Miller explained the reasoning behind the decision in a message to customers. “I understand that any increase in costs or changes to what you receive can be worrying and frustrating. Protecting this all-inclusive package, and the independence it provides, has guided every decision we have made. Thank you for being part of the Scheme and for the trust you place in us.”

The organisation also says most customers already drive less than the new mileage limit and use fewer tyres than the new cap allows. Motability believes this means many people will see little or no change in day-to-day use.

For example:

• The average customer drives around 7,500 miles per year
• Most customers replace two or fewer tyres during a three-year lease
• Fewer than 1% of customers used EU breakdown cover in 2025

By changing the areas used less often, Motability says it can protect the parts of the scheme that matter most.

How Much More Could a Typical Motability Lease Cost in 2026?

Motability estimates that if it made no changes at all, the average cost of a new lease would rise by around £1,100 because of VAT and Insurance Premium Tax.

By introducing the new mileage, tyre and travel rules, the organisation hopes to reduce that increase significantly. Even so, many drivers may still pay more than they do now.

Current estimates suggest:

• The average Advance Payment may rise by around £400
• Higher-spec vehicles could increase by more than this
• Lower-cost cars and no-Advance-Payment vehicles may remain largely unchanged
• Some customers may decide to switch to a smaller or cheaper car

A disability adviser who works with Motability users said many people are already reviewing their future options.

“Several clients have told me they are considering renewing earlier if they can. Others are looking at no-Advance-Payment vehicles because they are worried about what July 2026 could mean for their budget. The biggest concern is making sure they can still travel to work, appointments and family responsibilities.”

Motability and the Motability Foundation say financial help will still be available for people who struggle with the extra cost. Grants and support for essential adaptations are expected to continue, particularly for people who need specialist vehicles.

How Is the Motability Mileage Allowance Changing in July 2026?

The mileage allowance is one of the biggest changes coming to the Motability Scheme in July 2026. For new orders placed from that date, the standard allowance will fall to 10,000 miles per year.

That means:

• 30,000 miles over a standard three-year lease
• 50,000 miles over a five-year Wheelchair Accessible Vehicle lease

At the moment, many customers receive a higher allowance, so some people may need to plan their driving more carefully.

Motability says the change is based on how most people already use their vehicle. The organisation found that the average customer drives around 7,500 miles a year, which is well below the new limit.

However, the change could affect people who:

• Travel long distances for work
• Attend regular hospital appointments
• Have caring responsibilities
• Live in rural areas with fewer transport options

A customer from Cornwall described why the new limit may be difficult. “I do not drive for fun. Most of my miles are for hospital visits, caring for my parents and getting to work. Ten thousand miles sounds like enough until you live somewhere rural and depend on your car every day.”

Motability says an exceptions process is being developed for people with essential travel needs that go beyond the new allowance.

What Will the New Excess Mileage Charges Mean for You?

If you drive more than your mileage allowance after July 2026, you will have to pay a higher excess mileage charge at the end of your lease.

Motability says this is necessary because extra miles increase wear and tear, insurance costs and the overall value of the vehicle.

How Much Will You Pay if You Go Over Your Mileage Limit?

From 1 July 2026, the excess mileage charge will rise to 25p per mile, including VAT, for most new leases.

If your lease qualifies for a VAT concession, the cost will be slightly lower at 21p per mile.

This means if you go over your allowance by:

• 100 miles, you will pay £25
• 500 miles, you will pay £125
• 1,000 miles, you will pay £250

For many people, that could become a significant extra cost at the end of a lease.

For example, imagine you drive 12,000 miles a year instead of 10,000. Over a three-year lease, you would exceed the allowance by 6,000 miles.

At 25p per mile, that would mean an additional charge of £1,500 when your lease ends.

This is likely to affect people who regularly travel longer distances, especially if they:

• Live in rural areas
• Need frequent medical treatment
• Use their car for caring responsibilities
• Drive to work every day

Motability says the higher charge reflects the real cost of driving further than planned.

The organisation believes it is fairer to ask those who use more miles to pay more, rather than increasing costs for every customer.

Will There Be Any Support if You Need Extra Miles for Essential Travel?

Motability has recognised that some people genuinely need more than 10,000 miles each year. The organisation says it is developing an exceptions process for very limited circumstances.

Although full details have not yet been released, the support is expected to focus on people who travel extra miles because of essential reasons such as:

• Regular hospital or specialist appointments
• Caring for family members
• Travelling to work when no suitable public transport exists
• Living in remote or rural areas

Motability has said it understands that some customers cannot simply reduce the number of miles they drive.

The organisation explained that support will be available where there are exceptional circumstances and where extra mileage is clearly necessary. More details are expected before July 2026.

For many readers, this could become one of the most important parts of the changes.

If you already know that you regularly drive more than 10,000 miles a year, it may be worth keeping records of:

• Your annual mileage
• Why you travel those miles
• Any medical or caring commitments that require extra travel

That information could help if you later need to apply for additional support.

A welfare adviser who helps disabled drivers said many people are already gathering evidence. “We are encouraging people to check their current mileage now, rather than waiting until next year. If you already know you are driving 12,000 or 15,000 miles a year for essential reasons, it is better to prepare early and keep a record of why.”

When Will You Have to Pay the New Excess Mileage Fee?

The new charge will not be paid every month. Instead, it is collected when your lease comes to an end and your vehicle is returned.

That means you will not see the extra cost immediately, but you could face a larger bill later if you do not monitor your mileage.

The new fee only applies to:

• New leases ordered on or after 1 July 2026
• Miles driven above your agreed limit
• The total amount over the whole lease period

For example, if your three-year lease includes 30,000 miles and you return the vehicle after driving 31,500 miles, you will pay for the extra 1,500 miles.

To avoid a surprise bill, it may help to:

• Check your mileage every few months
• Divide your total allowance across the year
• Speak to Motability early if you think you may go over
• Consider whether a different vehicle or future support may be needed

The excess mileage fee is designed to encourage people to choose a lease that matches their real driving needs.

However, for some drivers, the new limit may still feel difficult, particularly if daily travel is essential rather than optional.

How Are the Tyre Replacement and EU Travel Rules Changing?

The Motability Scheme is also changing its tyre replacement policy and the rules for travelling abroad.

For new three-year leases from July 2026, you will be allowed up to six replacement tyres during the lease. Out of those six, a maximum of four can be because of accidental damage.

If you have a five-year Wheelchair Accessible Vehicle lease, you will be able to replace up to ten tyres, with up to six because of damage.

The new limits are:

• Six tyres over a three-year lease
• Four of those can be damage-related
• Ten tyres over a five-year WAV lease
• Six of those can be damage-related

Motability says most customers replace two or fewer tyres during a three-year agreement, so the change is not expected to affect the majority of drivers.

The rules for travelling to the EU are also changing. If you want to take your Motability vehicle abroad after July 2026, you will need to:

• Tell the RAC before you travel
• Apply for a VE103 certificate
• Pay a new administration fee

The organisation says fewer than 1% of customers used breakdown cover abroad in 2025, which is why this area was chosen for savings rather than making bigger changes to the main lease package.

Who Will Be Affected by the Motability Scheme Changes in July 2026?

The July 2026 changes will only affect people who place a new Motability order on or after 1 July 2026. If you already have a lease in place before then, your agreement stays exactly the same until it ends.

You may be affected if:

• Your current lease expires after 1 July 2026
• You are applying to the scheme for the first time after July 2026
• You choose a car with an Advance Payment
• You regularly drive more than 10,000 miles a year

Existing customers will not need to pay the new costs immediately. However, when your current lease comes up for renewal, the new rules may apply.

There is also a separate issue for customers in Scotland. The Scottish system operates under the Accessible Vehicle and Equipment Scheme, known as AVES. Discussions are still taking place about how the changes may work for people who receive support through Social Security Scotland.

Some customers are expected to feel the changes more than others. People who currently choose larger or more expensive vehicles may have to pay more or choose a cheaper alternative. Others may see little difference if they already use a low-cost car and stay within the mileage limit.

What Is Staying the Same on the Motability Scheme After July 2026?

Although several rules are changing, the core Motability package will remain the same.

Your lease will still include:

• Insurance for up to three drivers
• Servicing and routine maintenance
• Breakdown cover
• Support from the Motability team

This means you will still receive the all-inclusive package that many people rely on.

Motability says protecting these services was the main reason for making changes in other areas instead.

The organisation believes it is better to reduce mileage limits and tyre replacements than remove insurance or maintenance from the package.

There are also no changes to:

• Who can apply for the scheme
• The benefits that qualify you
• Current leases already in place
• Support for Wheelchair Accessible Vehicles

The organisation says it remains committed to helping disabled people stay independent and mobile.

Vehicles with no Advance Payment are still expected to be available, and grants should continue for customers who need extra support.

What Should You Do Before Your Motability Lease Renews in 2026?

If your Motability lease is due to end in 2026, it is worth preparing early.

The first step is to check when your current lease ends. If your renewal date is before 1 July 2026, you may still be able to renew under the current rules.

You should also review how many miles you drive each year. If you usually stay below 10,000 miles, the new mileage limit may not affect you. If you regularly go over that amount, it may be worth planning ahead.

Useful steps include:

• Check your lease renewal date
• Review your current annual mileage
• Compare vehicles with lower or no Advance Payment
• Keep records if you think you may need extra mileage support
• Look into grants or financial support if you are worried about future costs

If you are considering a more expensive vehicle, it may also help to compare prices before and after July 2026. Some people may decide to renew earlier or choose a lower-cost option to avoid the higher charges.

The most important thing is not to panic. Existing agreements are protected, and there is still time to understand the changes before they take effect.

Conclusion

The Motability Scheme changes in July 2026 will affect new leases, but they do not mean the end of the scheme or the loss of its core support.

The biggest changes are lower mileage limits, higher excess mileage charges, new tyre rules and extra costs for EU travel. These changes are being introduced because VAT and Insurance Premium Tax will increase the cost of running the scheme.

For most people, the all-inclusive package will stay the same, including insurance, servicing and breakdown cover. If you already have a current lease, nothing changes for now.

The best approach is to check your renewal date, review how much you drive and start planning early if your lease ends after July 2026. That way, you can make the right decision before the new Motability Scheme changes July 2026 begin.

FAQs

Can you renew your Motability car before July 2026 to avoid the new rules?

Yes, if your current lease is due to end before 1 July 2026, you may be able to renew under the existing Motability Scheme terms. You should check your renewal date early and speak to Motability if you are considering renewing sooner.

Will the Motability Scheme still include insurance after July 2026?

Yes, insurance will still be included as part of every Motability lease after July 2026. You will continue to receive cover for up to three named drivers.

What happens if you drive more than 10,000 miles a year?

You will have to pay an excess mileage charge at the end of your lease if you go over the new limit. From July 2026, that charge will be 25p per mile for most customers.

Can you still take your Motability car to Europe after the July 2026 changes?

Yes, you can still take your Motability vehicle to EU countries after July 2026. However, you will need to notify the RAC, get a VE103 certificate and pay an administration fee before you travel.

Will Wheelchair Accessible Vehicles be affected by the new taxes?

Most Wheelchair Accessible Vehicles and permanently adapted vehicles will remain exempt from the new VAT and Insurance Premium Tax rules. They will also continue to receive a higher mileage allowance of 50,000 miles over five years.

Could the July 2026 changes make some Motability cars more expensive?

Yes, some vehicles with higher Advance Payments are expected to become more expensive from July 2026. Lower-cost cars and vehicles with no Advance Payment are likely to remain available.

Will the changes affect people in Scotland differently?

Possibly, because Scotland uses the separate Accessible Vehicle and Equipment Scheme known as AVES. Discussions are still taking place, and more details are expected before July 2026.