Overview
- From 1 July 2026 the DWP and Motability applied 20% VAT to optional advance payments and Insurance Premium Tax to most new leases for orders starting on or after that date.
- New standard mileage for three-year leases is 30,000 miles (10,000 per year) and excess mileage is charged at 25p per mile including VAT, with tighter limits on tyre replacements and a £22 VE103 fee for travel documentation.
- Motability will publish an exceptions and support application process on 8 July to consider higher-mileage needs for healthcare, education or employment, while changes do not yet apply to Scotland under its separate AVES arrangements.
- The government says the package will save about £1 billion by 2030 and Motability says the Autumn Budget tax changes significantly raised its costs, but existing leases remain unchanged.
- A coalition of disability charities warns the new limits and higher excess charges risk reducing access to work, care and independence for people who travel long distances, particularly in rural areas.