UK Motability Scheme Costs Rise from July 2026

Disabled people in the United Kingdom who rely on the Motability Scheme for vehicle leasing are facing higher costs for new agreements starting July 1, 2026, following government tax changes announced in the Autumn Budget last year. The scheme, which serves nearly 890,000 users eligible for the higher or enhanced rate of the mobility component of disability benefits such as Personal Independence Payment, Disability Living Allowance, or Armed Forces Independence Payment, allows participants to use their benefits to lease accessible vehicles, promoting independence and mobility.

The Department for Work and Pensions confirmed the upcoming adjustments, which stem from Chancellor Rachel Reeves's decision to impose Value Added Tax on advance payments and extend Insurance Premium Tax to leases. These measures are projected to add £300 million in costs to Motability Operations, the organization running the scheme, and generate over £1 billion in government savings over five years. Existing leases remain unaffected, giving current users stability while prompting many to consider renewing before the deadline.

In a letter to customers dated March 26, 2026, Motability Operations Chief...