The revisions affect people who use qualifying disability benefits to lease a vehicle through the scheme. According to Motability and comments reported by multiple UK news outlets, the measures are intended to address rising operating costs linked to recent tax changes and wider financial pressures.
The Motability Scheme enables eligible disabled people to exchange part of their mobility benefit for a leased vehicle, helping many travel to work, attend medical appointments and carry out everyday activities. The latest changes apply to new leases beginning from 1 July 2026 and have prompted concern from industry representatives over their financial impact on customers.
According to Motability, the organisation expects government tax measures announced in the Autumn Budget to add around £300 million a year to the cost of operating the scheme by the end of the decade. The organisation says the revised terms are designed to reduce the increase in lease costs faced by customers.
New Lease Rules Reduce Annual Mileage Allowance
From 1 July, new Motability lease agreements include a standard annual mileage allowance of 10,000 miles, replacing the previous 20,000-mile limit. Drivers who exceed the allowance will now pay 25 pence for every additional mile, compared with the previous rate of 5 pence per mile.
Advance Payments have also increased by an average of around £400 for new applicants. According to Motability, the combined changes are intended to limit overall lease cost increases to about £400 on average over a three-year lease, rather than approximately £1,100 without the adjustments.
The changes affect people leasing vehicles through qualifying mobility benefits, including Personal Independence Payment (PIP), Disability Living Allowance (DLA), Adult Disability Payment (Scotland), Child Disability Payment (Scotland), Armed Forces Independence Payment (AFIP) and the War Pensioners’ Mobility Supplement (WPMS).
The scheme allows eligible claimants to exchange part of their disability benefit for a leased vehicle, making personal transport available to many people who rely on it for daily living.
Industry Response Highlights Concerns over Affordability
Tom Preston, chief executive of Hippo Leasing, described the changes as a “seismic shift” for disabled motorists across the UK. According to reports, he said that while the VAT and Insurance Premium Tax reforms were introduced by the government, the changes to mileage allowances reflected Motability’s response to increasing costs.
Preston said the combination of higher Advance Payments, the reduction in the annual mileage allowance and the increase in excess mileage charges could make the scheme less affordable for some customers. He added that new applicants could be priced out of the programme, while existing customers approaching renewal may have to decide whether to accept higher costs or leave the scheme without a vehicle.
Motability has defended the changes, stating that it recognises the importance of vehicles in supporting customers’ independence. A spokesperson said the organisation understands how significant access to a vehicle is for people who depend on the scheme in their daily lives.
