Major changes to the Motability scheme take effect today for new leases, as the company seeks to offset £300 million in additional tax charges announced in the autumn Budget. The scheme, which allows disabled people to swap qualifying mobility allowances for a car, scooter, or powered wheelchair, now reduces the annual mileage allowance from 20,000 to 10,000 miles. Excess miles will be charged at 25p per mile, up from 5p.
Changes to Tyre Replacements and Admin Fees
The number of tyre replacements allowed over a three-year lease has been reduced from eight to six. For five-year WAV leases, up to ten tyres can be replaced, with a maximum of six for damage. New contracts also require an admin fee and notification to the RAC when traveling to the EU. Existing leases remain unaffected until they end.
Previous Motability Reforms
In April 2026, Motability introduced compulsory "Drive Smart" black boxes for drivers under 30 or new to the scheme, but removed them in May 2026 after backlash over confusing rules and an inconsistent tracking app. Chancellor Rachel Reeves also removed luxury brands like BMW and Mercedes from the scheme.
Eligibility and Government Savings
To qualify for Motability, individuals must receive the Higher Rate Mobility Component of DLA, Enhanced Rate Mobility Component of PIP, AFIP, or War Pensioners' Mobility Supplement. The government expects to save £1 billion by 2030 through these reforms. Work and Pensions Secretary Pat McFadden said: “Today’s changes are driven by the fairness that underpins this Government – fairness for the taxpayer, fairness for disabled people and fairness for the country. We’re saving £1 billion of taxpayer money by removing VAT relief from some new Motability leases whilst ensuring the scheme still supports disabled people’s mobility and independence.”
Motability Chief Executive Statement
Andrew Miller, chief executive of Motability Operations, stated: “Tax changes announced in the UK Government’s Autumn Budget have significantly increased the cost of running the Motability scheme. While we have had to make difficult decisions in response, the changes we are making mean the scheme can keep disabled people connected to freedom and independence now and in the future. The scheme continues to offer value for disabled people, including cars with no advance payment in addition to their weekly payments.”
