Overview
- From 1 July 2026, VAT at 20% will apply to top‑up or advance payments for higher‑value vehicles and Insurance Premium Tax at 12% will apply to most Motability leases.
- Government responses to MPs confirmed exemptions for all existing leases and for vehicles designed for, or substantially and permanently adapted for, wheelchair or stretcher users.
- Motability projects an average £400 increase in the Advance Payment over a three‑year package and plans customer engagement on package changes in spring 2026.
- Motability has created a new Special Investigations Unit of about 80 staff and will strengthen data‑sharing with government and police to tackle vehicle misuse.
- The scheme’s vehicle range is being narrowed by removing premium brands and coupes/convertibles, and the Motability Foundation will continue means‑tested grants to support essential costs and complex adaptations.