Overview
- The Parliament petition opposing the plan has topped 16,000 signatures, crossing the 10,000 threshold that compels an official Treasury response and nearing the 100,000 level that can prompt a debate.
- From 1 July 2026, VAT will be added to Advance Payments and Insurance Premium Tax will apply to Motability leases, while VAT relief on weekly lease payments and vehicle resale will remain.
- The Treasury says the reforms will save more than £1 billion over five years and will not apply to vehicles designed or permanently adapted for wheelchair or stretcher users.
- Motability expects average upfront payments on new leases to rise by about £300 to £400 and will cut mileage allowances, raise excess mileage fees, tighten tyre replacement rules, and charge for taking vehicles abroad to offset costs.
- Customers who order before 1 July 2026 can avoid the new taxes, and the scheme, which serves about 890,000 eligible people on higher-rate mobility benefits, says current leases will not change.