What’s Changing, What’s Staying the Same, and What It Means for You
The Motability Scheme has played a crucial role in supporting independence and mobility for disabled people across the UK for decades. By allowing eligible individuals to lease a car, scooter, or powered wheelchair using their mobility allowance, the Scheme has helped hundreds of thousands of people access work, healthcare, and everyday life.
From late 2025 onwards, a series of changes will affect vehicle availability, lease costs, and how the Scheme operates in the future. While Motability has confirmed that its core mission remains unchanged, these updates represent a significant shift for both current and prospective customers.
Below, we explain what’s changing, what’s staying the same, and how these updates could affect you.
Why the Motability Scheme Is Changing
Like many large-scale, government-linked programmes, the Motability Scheme must adapt to economic pressures, policy priorities, and rising operational costs.
Reforms announced following the 2025 UK Budget are intended to improve the long-term sustainability of the Scheme, while continuing to deliver essential mobility support to disabled people.
Government ministers have also highlighted the need to focus spending on core mobility needs and reduce what they describe as overly generous subsidies in certain areas. These changes form part of a broader effort to balance fairness, value for money, and long-term viability.
Further information about eligibility, benefits, and how the Scheme operates can be found directly on the official Motability website.
Premium Car Brands Removed From the Scheme
One of the most noticeable changes is the removal of several premium vehicle manufacturers from the Motability price list for new lease applications.
Which brands are affected?
New leases will no longer be available for vehicles from brands such as:
- Audi
- BMW
- Lexus
- Mercedes-Benz
- Alfa Romeo
Motability has explained that this decision is designed to prioritise practical, reliable, and cost-effective vehicles that better align with the Scheme’s purpose.
What about existing customers?
- Orders placed before the change was announced will still be honoured
- Current leases on premium vehicles will continue until the agreed end date
Tax Changes Affecting Motability Leases
Two major tax changes will affect the cost structure of Motability leases from 2026.
VAT on Advance Payments
From July 2026, VAT will apply to Advance Payments on Motability vehicles. Previously, these payments were VAT-free for customers using qualifying disability benefits.
This means vehicles requiring an Advance Payment are likely to become more expensive upfront. Wheelchair Accessible Vehicles (WAVs) are expected to remain exempt from this change.
Insurance Premium Tax (IPT)
Insurance Premium Tax will also apply to the comprehensive insurance included within Motability lease packages.
While IPT already applies to most UK insurance policies, Motability customers have historically been exempt. Whether this additional cost is absorbed by the Scheme or passed on to customers will influence overall lease pricing.
More detail on Insurance Premium Tax and how it applies to UK insurance products is available via GOV.UK guidance on Insurance Premium Tax.
These tax reforms form part of wider fiscal changes expected to generate significant public savings over the coming years.
Changes to Lease Extension Rules
From mid-December 2025, long-term lease extensions will no longer be routinely available.
What’s changing?
- Extensions will typically be limited to around six months
- Approval criteria will be stricter
- Long extensions of up to two years will no longer be standard
This reflects improvements in vehicle supply and a strategy to keep the Motability fleet newer, more efficient, and environmentally improved.
If a longer extension was agreed before the deadline, it will still be honoured under the original terms.
A Long-Term Shift Towards British-Built Vehicles
Motability has also announced a long-term ambition to increase the proportion of British-built vehicles on the Scheme.
By 2035, the aim is for around half of all Motability vehicles to be manufactured in the UK. This aligns with wider government objectives to support domestic manufacturing, create jobs, and encourage investment in the UK automotive industry.
While this transition will take time, it represents a strategic shift in how the Scheme sources its vehicles.
What’s Staying the Same
Despite the upcoming changes, several important elements of the Motability Scheme remain unchanged.
- Existing leases are protected – customers can continue using their vehicles until the end of their agreement
- A wide range of practical vehicles remains available – many models still require no or low Advance Payments
- Support for wheelchair users continues – funding for adaptations and Wheelchair Accessible Vehicles remains a priority
- The core mission remains – supporting independence and mobility for disabled people stays central to the Scheme
What This Means for Current and Future Customers
If you’re already on the Motability Scheme or considering applying, it’s important to plan ahead.
- New applications for premium brands are no longer available
- Advance Payments may increase once VAT applies from July 2026
- Lease extensions will be shorter, so early planning is essential
- A broad range of everyday, accessible vehicles remains available
The Wider Debate Around the Motability Scheme
These changes have sparked wider debate about affordability, fairness, and sustainability.
Supporters argue the reforms protect the Scheme’s future and ensure funding is focused where it’s most needed. Critics raise concerns about reduced choice and rising costs for disabled people.
As with many social programmes, finding the right balance between financial sustainability and individual need remains a complex challenge.
Frequently Asked Questions About Motability Scheme Changes
Will my current Motability lease be affected?
No. Existing leases will continue unchanged until the end of the agreed contract.
Can I still order a premium brand car through Motability?
No. New applications for premium brands have been removed, but orders placed before the change will still go ahead.
When will VAT be added to Advance Payments?
VAT is expected to apply from July 2026. Wheelchair Accessible Vehicles are expected to remain exempt.
Will insurance still be included in Motability leases?
Yes. Comprehensive insurance remains included, although Insurance Premium Tax will now apply.
Are lease extensions still available?
Yes, but extensions will usually be limited to around six months and subject to stricter approval criteria.
Is Motability still supporting wheelchair users?
Yes. Funding for adaptations and Wheelchair Accessible Vehicles remains a key priority.