Major alterations to the Motability scheme have been implemented for new leases starting today in response to the company’s need to counterbalance tax implications. Motability enables individuals with disabilities to exchange their qualifying mobility allowance for the lease of a new vehicle, scooter, or powered wheelchair. Changes disclosed in the Budget last November confirmed the application of VAT and Insurance Premium tax to most new leases ordered after July 1, 2026. Motability predicts this will result in an additional £300 million in taxes for the business, leading to adjustments in mileage allowances. Effective immediately, new contracts will include a mileage limit of 10,000 miles annually, reduced from the previous 20,000 miles, with a charge of 25p per extra mile traveled, up from 5p. The number of allowable tyre replacements has also been reduced, and an admin fee is now required, along with notification to the RAC when traveling to the EU. Existing Motability leases remain unaffected until their completion. Recent changes to the scheme include the introduction and subsequent removal of compulsory “Drive Smart” black boxes for drivers under 30 or new to the program. Luxury brand vehicles like BMW and Mercedes have been excluded from the scheme by Chancellor Rachel Reeves. To qualify for Motability, individuals must receive specific disability allowances. Motability Operations’ CEO, Andrew Miller, highlighted the impact of tax changes on the scheme and emphasized the importance of maintaining support for disabled individuals. The government aims to save £1 billion by 2030 through Motability reforms, promoting fairness for taxpayers and disabled individuals. Work and Pensions Secretary Pat McFadden emphasized the government’s focus on fairness and efficiency in the welfare system and the economy.