Overview
- The measures take effect on 1 July 2026, and leases signed before that date keep existing reliefs.
- Top‑up or advance payments on higher‑value vehicles will be subject to the 20% VAT rate, while the portion covered by eligible mobility awards remains outside VAT.
- Insurance Premium Tax relief will be limited to vehicles substantially and permanently adapted for wheelchair or stretcher users, with other new leases charged the 12% standard rate.
- Motability says it will try to absorb some added VAT and IPT costs, and the Motability Foundation will continue means‑tested grants for specialist adaptations.
- Premium brands including BMW, Mercedes‑Benz, Audi and Lexus have been removed from the scheme, while adapted vehicles and WAVs retain VAT and IPT exemptions.