Hundreds of thousands of disabled drivers are set to face higher costs after major tax changes forced the Motability Operations to overhaul its pricing.
The company behind the Motability Scheme says it is introducing new charges and cutting allowances to absorb a £300 million tax increase announced in last year’s Budget.
For many users, it could mean paying more - or getting less for their money.
What’s changing for drivers
Motability customers taking out new leases later this year could see several key changes:
- Lower annual mileage allowances
- Higher charges for extra miles
- New fees for taking vehicles abroad
- Limits on tyre replacements
- Advance payments rising by £300 to £400 in some cases
The changes are expected to apply to new leases starting from July.
Why costs are rising for drivers
The overhaul follows tax changes announced by Chancellor Rachel Reeves in the Autumn Budget.
These include:
- VAT being applied to advance payments
- Insurance premium tax added to leases from 2026
Motability says the combined impact will add around £300 million in costs to the scheme.
Without changes, it estimates the average lease price would have risen by about £1,100.
The Motability Scheme is used by around 890,000 disabled people across the UK.
It allows those receiving higher-rate mobility benefits to exchange part or all of their payments for a leased vehicle, often including insurance, servicing and maintenance.
Despite its popularity, the scheme has faced increasing political scrutiny in recent months.
Recommended reading:
- Best Easter 2026 deals at supermarkets from Aldi to Waitrose
- Full list of DWP payments rising for parents, carers and families in 2026
- DWP launches major PIP review and claimants urged to come forward
The scheme has become a political flashpoint, with Reform UK recently calling for major reforms and claiming there is “abuse” within the system.
The Government has also signalled a shift, with ministers moving to restrict the use of higher-end vehicles on the scheme.
Motability Operations chief executive Andrew Miller said passing the full cost onto customers was not an option - but warned changes were unavoidable.
“If we did nothing, the average cost of a new lease would increase by around £1,100,” he said.
Share