The Motability Scheme has published its latest vehicle price list after new VAT rules came into force for most new leases from July 1. The organisation says it has worked to protect affordable options despite higher costs.
New Price List and VAT Impact
The updated July to September price list includes more than 70 vehicles with no or low Advance Payment, including more than 30 available with no Advance Payment. The changes follow UK Government tax measures from last year's Autumn Budget, which mean new Motability Scheme car leases now include standard-rate VAT and Insurance Premium Tax (IPT).
Andrew Miller, chief executive of Motability Operations, the company that runs the Motability Scheme, said: "Tax changes introduced by the UK Government have significantly increased the cost of running the Motability Scheme."
He continued: “The measures we are taking in response will help keep the Scheme sustainable, so that we can continue to support disabled people's freedom and independence for the long term. As a result of our work, the Scheme continues to offer strong value, with a wide range of vehicles available this quarter, including many cars with no Advance Payment. As we look ahead, we will continue to listen and engage with our customers to ensure the Scheme evolves in ways that best reflect their needs."
Cost Absorption and Customer Impact
Motability says it has absorbed much of the additional cost created by the tax changes, although customers may notice some Advance Payments have increased on certain vehicles. The organisation stressed that every lease still includes its all-inclusive package, covering insurance, servicing, maintenance, MOTs, breakdown cover and tyre replacement.
Alongside the new price list, Motability has published detailed guidance explaining how the VAT changes will affect customers.
VAT Application Details
One of the biggest reassurances is that people will not pay VAT on the lease payments made through their qualifying mobility allowance. However, VAT may apply to other costs linked to a new lease, including any Advance Payment for a vehicle, excess mileage charges and early termination fees, depending on an individual's circumstances and whether they qualify for VAT relief.
Customers ordering a new vehicle will be told what applies to them before signing their agreement. Existing customers whose lease began before July 1 will not see any immediate changes, with the new tax rules only applying when they order their next vehicle.
Other Changes for New Leases
Motability has also confirmed a number of other changes now apply to new leases placed from July 1. These include a standard mileage allowance of 30,000 miles over a three-year lease, or 50,000 miles for a five-year Wheelchair Accessible Vehicle (WAV) lease.
Customers will also be entitled to up to six tyre replacements on a three-year lease, including four for wear and tear, while five-year WAV leases include up to 10 tyre replacements, including six for wear and tear. An administration fee will also apply when customers take their vehicle abroad.
Motability stressed that these changes only apply to new orders placed from July 1 and do not affect existing lease agreements.
Scottish Customers and Vehicle Availability
The organisation also confirmed that the lease package changes will not yet apply to customers who receive their qualifying disability benefit through Social Security Scotland. It said those customers will be contacted once it has agreed with the Scottish Government what changes will be introduced and when.
Among the vehicles available with no Advance Payment this quarter are the Nissan Juke, Kia Stonic, Hyundai Inster, Toyota Aygo X Hybrid, Volkswagen Taigo, Renault Symbioz and Mazda CX-30.
The July to September price list is available now, with the next update due on October 1. Full details can be viewed on the Motability website.
