Motability Scheme Changes 2026: Every New Restriction Explained

What is changing in the Motability Scheme from 1 July 2026

Motability Operations, which runs the Scheme, has confirmed four changes applying to new orders placed on or after 1 July 2026: a reduced annual mileage allowance, an increased excess mileage fee, revised tyre replacement limits, and a new charge for taking a leased vehicle abroad. These changes follow tax measures announced by the UK Government in the Autumn Budget, which end the Scheme's previous exemption from VAT and Insurance Premium Tax on most new leases.

Why the Motability Scheme is changing

The Government's Autumn Budget announced that VAT and Insurance Premium Tax would apply to most new Motability leases, an exemption the Scheme had previously held. According to Motability Operations, doing nothing in response would have added around £1,100 to the average cost of a new lease. The changes to mileage, tyres and travel fees were designed to offset as much of that tax impact as possible while keeping the core all-inclusive package intact.

New mileage allowance

Motability states that around three in four customers already drive within the new allowance, with the average customer covering roughly 7,500 miles a year. Customers who expect to exceed the allowance can pay for additional miles, and Motability says it is considering ways to support customers who need to drive more in limited, exceptional circumstances.

Which vehicle brands are affected

Motability has stopped accepting new applications for several brands previously available through the Scheme, including Audi, BMW, Mercedes-Benz, Lexus and Alfa Romeo, alongside the removal of coupes and convertibles from the price list. Several new manufacturers have joined the Scheme's range at the same time, including Omoda, BYD, GWM Ora and Chery, widening the choice of electric SUVs available to new applicants. Customers who already lease a vehicle from an affected brand are not required to give it up: the change applies only to new orders.

Tyre replacement and travelling abroad

Tyre replacements remain included in the lease, but with new limits. A 3-year car lease now includes up to six tyre replacements, of which up to four can be for accidental damage. A 5-year Wheelchair Accessible Vehicle lease includes up to ten replacements, of which up to six can be for accidental damage. Motability says the average customer replaces two or fewer tyres over a 3-year lease, so the new limits are designed to cover typical wear and tear. Separately, customers taking their leased vehicle into the European Union now need a VE103 certificate, alongside a small administration fee, and must notify their breakdown provider in advance of travel.

DriveSmart: the telematics system for new customers

Since April 2026, new Motability customers have been enrolled in DriveSmart, a telematics system that records driving behaviour such as frequency, timing and journey length through an in-vehicle device or companion app. Motability states that DriveSmart does not track where a vehicle goes, but it does generate a weekly driving score, and the company's own guidance indicates that repeatedly low scores may affect a customer's future access to the Scheme. There is no opt-out for new customers enrolled in the system.

What is not changing

Motability Operations has confirmed the all-inclusive package remains in place for both existing and new leases: insurance for up to three named drivers, servicing and maintenance, and UK breakdown cover are all retained. Mobility scooter and powered wheelchair leases are unaffected by any of these changes, and no VAT applies to payments for those products.

Who is exempt from the new tax charges

Wheelchair Accessible Vehicles and vehicles with significant adaptations remain exempt from the new VAT and Insurance Premium Tax charges. Scotland operates under a separate agreement, the Accessible Vehicles and Equipment Scheme, and Motability has stated these changes do not currently apply there while it works with the Scottish Government on how AVES may be affected in future.

Do these changes affect my existing Motability lease?

No. Motability has confirmed that if you already have a lease, or ordered before 1 July 2026, your current agreement continues on its existing terms until it ends. The new charges and limits only apply when you place a new order or renew.

Can I still lease an Audi or BMW through Motability?

Not as a new applicant. Motability has stopped accepting new applications for several brands, including Audi, BMW, Mercedes-Benz, Lexus and Alfa Romeo. Customers already leasing one of these vehicles are not affected until their current lease ends.

Will I be charged more for going over my mileage allowance?

Yes. The excess mileage charge is 25p per mile including VAT, applying once you exceed the new allowance of 30,000 miles over a 3-year car lease or 50,000 miles over a 5-year Wheelchair Accessible Vehicle lease.

Do I have to use DriveSmart?

New customers enrolled in the Scheme are placed into DriveSmart with no opt-out, according to Motability's own guidance. The system tracks driving behaviour rather than location, and generates a weekly score that may affect future access to the Scheme if it stays low over time.

Are wheelchair accessible vehicles affected by the tax changes?

No. Motability has confirmed that Wheelchair Accessible Vehicles and vehicles with significant adaptations remain exempt from the new VAT and Insurance Premium Tax charges introduced for most other leases from 1 July 2026.