UK Tax Hikes Motability Costs

The United Kingdom government, led by Chancellor Rachel Reeves, announced significant tax changes in the Autumn Budget, applying VAT to Advance Payments and Insurance Premium Tax to leases under the Motability scheme from July 2026. These changes are expected to add £300 million in annual costs to Motability, a private company that leases vehicles to disabled individuals. In response, Motability, through its CEO Mark Miller (businessman), is implementing various changes to its scheme, including reducing annual mileage allowances, increasing excess mileage fees, altering tyre replacement limits, introducing charges for taking vehicles abroad, and raising average advance payments by £300-£400 for new leases. The government aims to save over £1 billion over five years with these reforms, which have drawn criticism from groups like United Kingdom — Reform UK and prompted parliamentary questions from MPs like Neil Duncan-Jordan. While Wheelchair Accessible Vehicles remain exempt from the new taxes, the changes will significantly increase costs for many of the 890,000 disabled people who rely on the Motability scheme.