The Motability scheme is introducing major changes from July 2026
Motability users are being told that impending changes to the scheme could save them up to £1,100. The announcement was made by the Motability scheme ahead of significant alterations coming into effect on July 1.
From that date, new contracts for those leasing vehicles will only permit 10,000 miles of travel. Should drivers exceed this limit, they will be charged an extra 25p per mile. Previously, the allowance stood at 20,000 miles, with an excess charge of just 5p per mile.
VAT and a premium tax will also be applied to most new leases, alongside the increased mileage charges. Outlining these changes on the Motability Instagram page, chief asset risk officer Clare Ickringill explained that reducing the mileage limit would in fact help safeguard users.
She said: “Government tax changes have pushed up the cost of running the Motability scheme. If we did nothing, it would make leases on average around £1,100 more expensive. We didn’t want to cut the core package we know you rely on, including insurance, servicing, maintenance and breakdown cover. So we looked for a way to evolve the scheme that impacts as few people as possible.
“So how does lower mileage help? If we know how many miles a car will drive, we can plan costs more accurately from the start. A car that’s driven fewer miles will keep more of its value when it’s at the end of its lease, and it’s less likely to have an accident. This helps lower our insurance costs. On top of that, cars that have lower mileage are also less likely to break down or need repairs. Most leasing companies use mileage limits for this reason, so that drivers can pay for what they use.
“So what’s changing? From the 1st of July 2026, new leases will include 10,000 miles a year instead of 20,000. Three quarters of all our customers already drive under 10,000 miles, so won’t be affected.”, reports the Liverpool Echo.
“What does the additional mileage cost cover? If you do need to drive more, you can pay more for the extra miles. The additional cost per mile will cover not just the extra distance, but also the extra insurance needed for those miles. With us, everything is included in this cost.
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“The bottom line: this change is to offset rising costs and make sure we keep the scheme sustainable and affordable for as many people as possible, while protecting your all-inclusive package. Because we know it’s more than just a car, it’s your independence.”
This was one of several updates announced to the scheme in 2025, including the removal of all ‘premium’ brands such as BMW and Mercedes. Further changes included the introduction of technology fitted to all cars where new drivers or anyone under 30 is named on the lease.
Drivers are required to install black boxes in their vehicles and download an app on the phone of anyone who gets behind the wheel. Each car will be kitted out with telematics technology that tracks driving behaviour, including speed and braking patterns, producing a weekly rating of green, amber, or red.
Should a driver record a red week, both the customer and the relevant driver will receive feedback. If the driver continues to drive dangerously, despite the feedback, for two consecutive weeks, or four over the course of 12 months, they may be removed from the scheme. Motability says its average motorist covers 7,500 miles each year.
