Understanding the VAT changes to the Motability Scheme

Why is this change happening?

From 1 July 2026, most new Motability Scheme leases will include VAT and Insurance Premium Tax (IPT).

These changes follow a decision by the UK Government to change the tax rules for the Motability Scheme.

If you already have a lease before 1 July 2026, this will not impact you until it is time to get your next vehicle.

What is VAT?

VAT is a tax that's added to many goods and services in the UK.

The standard rate of VAT is currently 20%. From 1 July 2026:

• Prices for new cars on the Scheme will include standard rate VAT
• Prices for new WAVWheelchair Accessible Vehicles on the Scheme will be shown at 0% VAT

VAT may apply to some other payments you make as part of a new Motability Scheme lease.

What might I need to pay VAT on?

Most customers will not pay VAT on the lease payments made through your qualifying mobility allowance.

However, you may need to pay VAT on other payments linked to your lease, including:

• Any Advance Payment, if the vehicle you choose has one
• Excess mileage charges
• Early termination fees

Your dealer will explain what applies to you before you order your vehicle. Your confirmed price will be shown in your pre contract agreement.

Who can get VAT relief?

Whether VAT relief applies depends on your individual circumstances and whether you meet the eligibility criteria.

You do not need to pay this VAT if the vehicle has been permanently and substantially adapted for someone who normally uses a wheelchair*, or who needs to travel on a stretcher.

_{*A person may be considered as normally using a wheelchair for the purpose of this declaration if they are a lower limb amputee or a disabled person with a degenerative condition, such as multiple sclerosis, who uses a wheelchair only when their condition requires it.}

This person could be you or someone who uses the vehicle, such as:

person could be you or someone who uses the vehicle, such as:

• an additional driver
• someone in your household
• a family member

If your vehicle has been significantly adapted, you’ll need to complete a Customer Eligibility Declaration (CED) when you order your vehicle to make sure the right VAT is applied to your lease payments.

This will include:

• Most WAVWheelchair Accessible Vehicles
• Cars with significant adaptations that help you travel safely and independently

VAT on Motability Scheme Wheelchair Accessible Vehicles (WAVWheelchair Accessible Vehicles)

The prices shown on our price list for new WAVWheelchair Accessible Vehicles include 0% VAT. This is because most WAVWheelchair Accessible Vehicle customers will be eligible for VAT relief. Whether this applies to you will depend on whether you meet the eligibility criteria.

Your dealer will explain whether you qualify for VAT relief.

VAT relief for vehicle adaptations

If your disability means you need an adaptation fitted to your vehicle, the adaptation may qualify for VAT relief.

You do not need to pay VAT on the cost of adaptations if they’re needed because of a person’s disability.

This person could be you. Or it could be someone who uses the vehicle regularly, like:

• an additional driver
• someone in your household
• a family member

It's important to remember that this VAT relief only applies to the adaptation itself. Your dealer will explain whether VAT relief also applies to your vehicle when you order it.