VAT and Insurance Premium Tax (IPT) changes will apply to leases on the Motability Scheme from 1 July 2026.
The UK Government has decided what will be subject to standard rate VAT. This will be most Scheme leases.
For a lease to continue to benefit from VAT concessions, you must meet the criteria set out by HMRC. This is:
This will include:
You’ll need to complete a Customer Eligibility Declaration when you order a new vehicle to confirm if the HMRC criteria for VAT concession applies.
When VAT applies, it will not be on the lease payments you make from your mobility allowance.
Instead, VAT will be applied at a standard rate to most other lease payments. This includes:
There will be no change to the terms of the agreement we sent when you ordered your car. You can find details of your terms and conditions in your online account or in the letter we sent to you shortly after you ordered your car.
If you collect your car after 1 July, you might need to pay VAT on some payments, such as excess mileage or early termination fees.
Your Advance Payment will not change, no matter when you collect your car. Our price freeze means the price at the time you apply is locked.
Your lease agreement will include details of the payments and whether standard rate VAT is being applied.
If you’re ordering a vehicle that meets the HMRC criteria for VAT concession your dealer will ask you to complete a Customer Eligibility Declaration to confirm you normally use a wheelchair or stretcher.
These are major, permanent changes made to a vehicle to support customers with more complex mobility needs. For example, if you use a wheelchair and need built-in equipment or specialist driving controls to travel safely and comfortably.
These types of adaptations usually involve structural changes to the vehicle and are designed to be a long-term solution.
Vehicle leases with significant adaptations can continue to benefit from VAT concessions, if you meet HMRC’s disability exemption criteria.
If your disability means you need adaptations fitted to your car, and the adaptations are necessary for you to drive or use the vehicle, then the cost of the adaptation will not include a VAT charge. You’ll need to complete a Customer Eligibility Declaration when you order your car.
This only applies to the cost of the adaptation. Your lease will still be subject to standard rate VAT.
If you're unsure, we’ll guide you through this when you’re choosing and ordering your car.
No.
If VAT applies to your lease, it also applies to any payments you make on top of your mobility allowance. This includes costs such as excess mileage or early termination fees.
Although these vehicles are adapted, HMRC legislation only allows VAT concessions where specific criteria are met.
Yes. Your dealer will ask you to complete a short Customer Eligibility Declaration when you order your car to confirm that you meet HMRC’s criteria.
There are no changes to the lease of powered wheelchairs and scooters. VAT will not be charged on any payments.
The Government changes to tax are for all lease agreements that start from 1 July 2026. Your lease agreement starts the day you collect your car, so if this is after 1 July 2026 you’ll need to pay VAT on some lease costs.
This includes excess mileage and early termination fees. Your Advance Payment will not change no matter when you collect your car. Our price freeze means the price at the time you apply is locked.
The standard rate of VAT in the UK is 20%.
