The Motability Scheme is set to implement significant changes for new lease agreements starting July 1, 2026, including revised tyre replacement limits and reduced mileage allowances. The updates aim to align the scheme with current usage patterns and ensure its sustainability amid rising costs from VAT and Insurance Premium Tax changes.
Under the new tyre policy, lessees with a three-year contract can replace up to six tyres, with a maximum of four for damage. For five-year leases, up to ten tyres may be replaced, of which six can be due to damage. These limits are designed to cover typical usage, as the scheme notes that most customers currently replace two tyres or fewer over a three-year lease. Tyre replacement remains included within 'fair use' criteria.
The mileage allowance will also be reduced from the current 20,000 miles per year to an average of 10,000 miles annually. Excess mileage charges will increase from 5p to 25p per mile, including VAT. A three-year lease will allow a total of 30,000 miles before charges apply, while five-year leases for wheelchair accessible vehicles will have a 50,000-mile limit. Additional miles driven will be billed at the end of the lease.
Existing lease agreements will remain unaffected; the changes only apply to new orders placed on or after July 1, 2026. The Motability Scheme confirmed that customers who reach their tyre replacement limit will be advised on their options, with a focus on maintaining mobility and transparency of costs.
The overhaul is partly driven by forthcoming tax adjustments, including a VAT and Insurance Premium Tax change effective July 1, 2026. The scheme stated that these updates are necessary to 'keep the scheme sustainable' while continuing to support disabled individuals who use their mobility benefits to lease vehicles.
