Based on the linked source; automatically prepared and checked against the original report.
What changed
Most new Motability Scheme leases ordered from 1 July 2026 include standard-rate VAT and Insurance Premium Tax. New car Advance Payments are displayed with 20% VAT, while new Wheelchair Accessible Vehicle prices are displayed with 0% VAT. The changes follow a UK Government decision to alter the Scheme’s tax rules.
Who may qualify for relief
Most customers will not pay VAT on lease payments made through a qualifying mobility allowance, but VAT may apply to Advance Payments, excess-mileage charges and early-termination fees. Eligibility for relief depends on individual circumstances. WAV users may qualify where a vehicle is permanently and substantially adapted for someone who normally uses a wheelchair or needs to travel on a stretcher, subject to a Customer Eligibility Declaration.
Existing leases and next steps
Leases that began before 1 July 2026 are unaffected until customers obtain their next vehicle, although some payments may attract VAT if the vehicle was ordered earlier but collected after that date. Dealers will explain applicable treatment before ordering, and the confirmed price will appear in the pre-contract agreement. Adaptations required because of a disability may qualify for relief, but the relief applies to the adaptation itself. Powered wheelchair and scooter leases have no changes, with no VAT charged on payments.
