Thousands of drivers on the Motability Scheme will face new charges from Wednesday, July 1, 2026, if they drive more than 10,000 miles a year. The scheme is reducing the standard mileage allowance and introducing a 25p per mile excess charge for any mileage over the annual limit, according to a statement from Motability.
Key changes from July 1
Under the latest changes, new Motability Scheme Advance Payments will now include 20% VAT, while insurance costs are also increasing for some customers. Wheelchair Accessible Vehicles (WAVs) remain exempt from the VAT change. Leases will now have an average yearly mileage allowance of 10,000 miles per year, with a total allowance of 30,000 miles across a three-year lease, reduced from the previous 50,000 miles.
Reason for the changes
Motability stated that the mileage changes are in response to new tax costs imposed by the government. In a statement, the Motability Scheme said: "From 1 July 2026, when you order a new vehicle on the Motability Scheme the standard mileage included will be reduced. We’re making this change as part of wider steps to manage rising costs, including tax changes from the UK Government."
Impact on drivers
With millions of families preparing for summer holidays and school breaks, Majid Ismailzada, Director at GM Direct Hire, warned that many drivers are facing rising motoring costs. He said: "July is already an expensive month for many households because of summer travel, higher fuel spend and preparing for family holidays. For disabled motorists who need to replace or order a vehicle through the Motability Scheme, these changes could add another unexpected cost. Anyone affected should make sure they fully understand how the changes apply to their specific vehicle before ordering. Not every customer will see the same increase, and Wheelchair Accessible Vehicles remain exempt from the VAT changes."
Scotland exemption
Motability stressed that the changes do not yet cover those in Scotland. It added: "Customers who get their allowance from Social Security Scotland will not be impacted by these changes from 1 July. We'll be in touch when we've confirmed a date with the Scottish Government."
