Significant changes are underway for Personal Independence Payment (PIP) and Disability Living Allowance (DLA) claimants who use the Motability Scheme to lease vehicles. This vital programme enables disabled individuals to use part of their disability benefits to access a vehicle, supporting their work, health, and daily independence.
Starting 1 July 2026, new mileage limits and higher insurance excess charges will come into effect across the UK. Motability states these adjustments are necessary to manage the rising costs of running the scheme.
Tom Preston, CEO of Hippo Leasing, described the changes as a “seismic shift” for disabled motorists. “The new VAT and Insurance Premium Tax reforms imposed by the government, combined with Motability’s own changes to mileage limits and excess charges, will significantly impact new applicants,” he explained.
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The allowance for annual mileage is being halved from 20,000 miles to 10,000 miles. Additionally, drivers exceeding this mileage will face a steep increase in excess charges—from 5p to 25p per extra mile. Advance Payments are also rising by about £400 on average. Preston warns that these changes will price many drivers out of the scheme or force current users to choose between higher costs or losing their vehicle.
Motability defends the updates, highlighting that the lease cost increase over three years could have reached £1,100 without these adjustments. The new measures aim to limit the average increase to around £400. These shifts respond to recent UK government tax changes, which Motability estimates will add £300 million annually to scheme costs by decade’s end.
A Motability spokesperson emphasized the importance of vehicles to their customers’ independence and reassured that the organisation is striving to manage costs while continuing to support disabled drivers.