Major Changes to the Motability Scheme: What You Need to Know
UK government and Motability announced significant changes affecting 860,000 disabled motorists. From premium brand removals to new tax changes, here's your essential guide.
Understanding the Changes and What They Mean For You
What Is Happening to the Motability Scheme?
In a significant announcement on 24th November 2025, Motability Operations revealed sweeping changes to the UK's largest disability vehicle leasing scheme. The changes, which came into effect immediately, represent one of the most substantial updates to the scheme in recent years.
The Motability Scheme enables disabled people who receive certain qualifying mobility allowances to lease a car, Wheelchair Accessible Vehicle (WAV), scooter, or powered wheelchair. Currently supporting around 860,000 people across the UK, the scheme bundles insurance, servicing, MOTs, breakdown cover, and maintenance into a single all-inclusive lease package.
- Premium car brands removed: Audi, Alfa Romeo, BMW, Lexus, and Mercedes-Benz
- All coupé and convertible models withdrawn (including the popular MINI Convertible)
- Orders for removed brands must be placed by 30th November 2025 (5pm) if an appointment already been booked
- No new orders for removed brands from 1st December 2025
If you already have a Motability lease or ordered your vehicle before 25th November 2025, your agreement will continue unchanged. Vehicles ordered before the deadline will still be delivered as planned.
Premium Brands Removed: What's Changed and Why
The most immediate and visible change is the removal of five premium car manufacturers from the Motability vehicle list. This decision follows months of political pressure and media scrutiny around the availability of high-end vehicles through the scheme.
Brands No Longer Available:
5,294 registrations (2025 YTD)
2,928 registrations (2025 YTD)
5,019 registrations (2025 YTD)
Small market share
Small market share
Understanding the Context
It's important to understand that only a small proportion of Motability customers leased premium vehicles. Combined, these five brands represented approximately 13,000 registrations out of nearly 229,000 total Motability vehicles registered year-to-date in 2025 — roughly 5.7% of the scheme's fleet.
Additionally, customers who chose premium vehicles had to pay the difference themselves through higher Advance Payments. These vehicles carried no extra cost to taxpayers, yet their availability became a political flashpoint amid broader debates about benefit spending.
— Chancellor Rachel Reeves, Autumn Budget Statement
What Remains Available
Despite the removal of German premium brands, the scheme still offers a wide selection of vehicles from mainstream manufacturers, including:
- Peugeot: The most popular brand with 28,127 registrations in 2025
- Nissan: 20,920 registrations (British-built models available)
- Vauxhall: 18,710 registrations (British-built at Ellesmere Port)
- Volkswagen: 16,891 registrations
- Kia: 16,184 registrations
- Hyundai: 15,009 registrations
- Ford, Toyota, Honda, Mazda, Škoda, SEAT, and many others
Interestingly, some brands that might be considered premium — such as Volvo and Polestar — remain available on the scheme, as Motability specifically defined "premium" as the five removed manufacturers.
Body Styles Removed
In addition to the brand restrictions, all coupé and convertible models have been withdrawn from the scheme. Motability explained this decision as part of its renewed focus on "vehicles that meet disabled people's needs and represent value and purpose."
This change affects models like the popular MINI Convertible and various two-door sports models that some customers had chosen for their driving enjoyment and independence.
Budget 2025: Major Tax Changes Coming
Alongside the vehicle list changes, Chancellor Rachel Reeves announced significant tax reforms to the Motability Scheme in her Autumn Budget on 30th October 2025. These changes are projected to save the Treasury over £1 billion over the next five years.
VAT Relief Ending on Advance Payments (July 2026)
Currently, Advance Payments — the extra amount customers pay upfront when leasing a vehicle that costs more than the weekly mobility allowance covers — are exempt from VAT. From July 2026, this exemption will end.
- All new Motability leases from July 2026 will have 20% VAT added to Advance Payments
- This will increase upfront costs for customers choosing vehicles requiring Advance Payments
- The exact increase will depend on the Advance Payment amount
- Wheelchair Accessible Vehicles (WAVs) remain exempt — VAT changes will not apply to these essential vehicles
Example Impact:
| Advance Payment | Current Cost (VAT Exempt) | From July 2026 (With 20% VAT) | Increase |
|---|---|---|---|
| £1,000 | £1,000 | £1,200 | +£200 |
| £2,000 | £2,000 | £2,400 | +£400 |
| £3,000 | £3,000 | £3,600 | +£600 |
| £5,000 | £5,000 | £6,000 | +£1,000 |
Important: An Advance Payment is a one-off payment made at the beginning of a lease. The current qualifying weekly Mobility Allowance is £77.05, which covers many vehicles on the scheme with no Advance Payment required.
Insurance Premium Tax (IPT) Being Applied
For the first time ever, Insurance Premium Tax will be levied on the all-inclusive insurance cover provided by the Motability Scheme. Because each lease currently bundles insurance, maintenance, MOTs, breakdown cover, and tyre replacement into a single fee, adding IPT is expected to increase overall running costs.
The exact rate and implementation details are still being finalised, but unless absorbed by Motability Operations, these added costs are highly likely to be passed on to customers through quarterly pricing adjustments.
Additional Operational Changes
Two further changes to scheme operations have been announced:
- Annual Mileage Cap Reduced: The current 20,000-mile annual allowance will be reduced (exact new limit to be confirmed)
- Overseas Breakdown Cover Removed: Breakdown cover for overseas travel will no longer be included as part of the standard lease package
Motability Operations CEO Andrew Miller stated that over the next six months, they will be "looking at what we include, how we manage costs and how we make sure the Scheme stays sustainable for the long term." Full details of how these changes will be implemented are expected in the coming months.
Timeline of Changes: What Happens When
Announcement Made: Motability announces removal of premium brands and coupés/convertibles with immediate effect
Changes Take Effect: Premium brands removed from the searchable price guide. No new applications accepted for Audi, Alfa Romeo, BMW, Lexus, or Mercedes-Benz
Final Order Deadline: Last chance to order vehicles from removed brands if you already have a Motability appointment booked
Hard Cutoff: No orders for removed brands can be placed after this date
VAT Changes Begin: 20% VAT applied to all Advance Payments on new leases (WAVs exempt)
IPT Implementation: Insurance Premium Tax applied to scheme insurance for the first time
Mileage Cap Reduced: New lower annual mileage allowance introduced
Overseas Cover Removed: Breakdown cover for overseas travel no longer included
British-Built Target: 50% of all Motability vehicles to be manufactured in Britain (approximately 150,000 vehicles annually)
The Push for British-Built Vehicles
Alongside the immediate changes, Motability has announced an ambitious long-term commitment: by 2035, half of all vehicles leased through the scheme will be British-built. This represents a massive increase from current levels and signals a strategic shift toward supporting UK automotive manufacturing.
The Challenge
Meeting this target will be challenging. Currently, around 800,000 vehicles are built in the UK annually, of which approximately 100,000 meet Motability's eligibility criteria. Increasing British-built vehicles from 22,000 to 150,000 per year represents nearly a sevenfold increase.
This ambitious goal will require significant investment in UK manufacturing capacity and assumes substantial growth in domestic electric vehicle production ahead of the 2035 ban on new petrol, diesel, and hybrid car sales.
Current British-Built Options
Today, Motability customers can already choose from several British-built vehicles:
- Nissan models: Built at Sunderland plant (including popular Qashqai and Juke)
- Vauxhall models: Built at Ellesmere Port (including Combo Life)
- MINI models: Built at Oxford (though convertibles now excluded)
- Jaguar Land Rover: Various models built at UK facilities
- Others: Selected Toyota, Honda, and Bentley models
— Andrew Miller, CEO, Motability Operations
Government Support
Chancellor Rachel Reeves welcomed the commitment, stating: "Backing British car manufacturing will support thousands of well paid, skilled jobs and is exactly the long-term investment our Modern Industrial Strategy delivers."
James Taylor, Managing Director of Nissan GB, responded positively: "Nissan welcomes Motability's commitment to buy British-built cars and its support for UK manufacturing. We look forward to working with Motability to deliver its ambitious goals."
Who Is Affected by These Changes?
You Are Protected If:
You Are Affected If:
- Your lease is due for renewal and you planned to choose a vehicle from Audi, Alfa Romeo, BMW, Lexus, or Mercedes-Benz
- You're a new customer who was hoping to lease a premium brand or coupé/convertible model
- You require an Advance Payment vehicle and your lease starts after July 2026 (you'll pay 20% more in VAT)
- You rely on high annual mileage and will be impacted by the reduced mileage cap
- You regularly drive abroad and use overseas breakdown cover
If your lease ends soon and you were planning to order a vehicle from one of the removed brands, you'll need to choose an alternative from the manufacturers that remain on the scheme. Speak to your Motability dealer about comparable options that meet your needs.
What Disability Charities and Experts Are Saying
Before the Budget announcement, several disability charities warned about the potential impact of adding VAT and IPT to the scheme.
Concerns About Affordability
Disability Rights UK warned that adding VAT and IPT could increase the cost of even the cheapest cars, potentially making the scheme unaffordable for people on low or fixed incomes. They expressed concern that these changes would add financial pressure to disabled households already facing higher living costs.
The Motability Campaign Collective
Organisations involved in the Motability Campaign Collective have urged the government to:
- Protect VAT exemptions to prevent extra financial burdens on disabled people
- Avoid decisions driven purely by political optics rather than practical need
- Consider the full impact of changes on disabled people's independence and mobility
- Recognise that comments about "luxury benefits" reinforce harmful stigma
Safety and Hostility Concerns
Advocacy groups have warned that the public debate around the scheme has increased hostility towards disabled people. Comments about cutting "luxury benefits" risk reinforcing stigma and making everyday life less safe for disabled people, particularly those with invisible disabilities.
These changes come amid broader concerns about benefit spending and public confidence in the welfare system. However, it's crucial to remember that the Motability Scheme serves a vital purpose: enabling disabled people to maintain independence, access work, healthcare, education, and everyday activities that many take for granted.
What You Should Do: Practical Steps
If Your Lease is Due for Renewal Soon
If You're Planning to Order Soon
- Act quickly if you have an appointment booked: If you have an appointment with a dealer for a now-removed brand and still want one of these vehicles, you must complete your order by 5pm on 30th November 2025
- Consider your renewal date: If your lease starts after July 2026 and requires an Advance Payment, factor in the additional 20% VAT when budgeting
- Explore WAV options if applicable: Wheelchair Accessible Vehicles remain exempt from the VAT changes
If You Already Have a Motability Vehicle
Your existing lease agreement will continue unchanged. You don't need to take any action. If you currently drive a BMW, Mercedes, Audi, Lexus, or Alfa Romeo through Motability, you can continue using it for the duration of your lease with full support from the scheme.
Planning for Future Costs
If you'll need to renew after July 2026 and typically require an Advance Payment:
- Start saving earlier to accommodate the 20% VAT increase
- Consider whether a vehicle with a lower or no Advance Payment might meet your needs
- Look at running costs — some newer, more efficient vehicles may offset higher upfront costs
- Remember that WAVs remain VAT-exempt if you require a Wheelchair Accessible Vehicle
Stay Informed
- Monitor Motability updates: Visit the official Motability website regularly for the latest information
- Contact Motability customer services: Call 0300 456 4566 if you have questions about how changes affect your specific situation
- Speak to your dealer: Authorised Motability dealers can provide personalized advice about vehicle options
-
Check quarterly pricing: Watch for price changes when Motability releases quarterly updates
Resources and Further Information
Official Motability Resources:
- Motability Scheme Website: www.motability.co.uk
- Customer Services: 0300 456 4566 (Mon-Fri 8am-7pm, Sat 9am-1pm)
- Vehicle Price Guide: Search for available vehicles at www.motability.co.uk/cars
- Dealer Locator: Find your nearest authorized Motability dealer
Government Resources:
- Personal Independence Payment: www.gov.uk/pip
- Disability Living Allowance: www.gov.uk/dla-disability-living-allowance-benefit
- Budget 2025 Documents: www.gov.uk/government/collections/autumn-budget-2025
Disability Support Organisations:
- Disability Rights UK: www.disabilityrightsuk.org
- Disabled Motoring UK: Information and advice for disabled motorists
- Motability Campaign Collective: Advocacy for Motability users
- Citizens Advice: Free, impartial advice on benefits and mobility
Disclaimer: This blog post is for informational purposes only and was accurate as of the date of publication (November 2025). Motability Scheme rules, vehicle availability, and pricing are subject to change. Always check the official Motability website or contact customer services for the most up-to-date information. This article is not official Motability guidance.
Sources: Motability Operations official announcements, UK Government Autumn Budget 2025, Motaclarity.co.uk, BBC News, Car Dealer Magazine, Fleet News, Auto Express, various disability advocacy organisations and news outlets.