Sir Keir Starmer has approved four new driving rules for Motability Scheme users, set to take effect from July 1, as he steps down as Prime Minister. The changes, which include new VAT charges, reduced mileage allowances, and limits on tyre replacements, will make leasing a vehicle more expensive for many customers. Starmer resigned last week, and is expected to be replaced by Andy Burnham, the new MP for Makerfield.
VAT Charges on Lease Payments
From July 1, VAT will be applied at the standard rate to additional lease payments, including advanced payments, early exit fees, and excess mileage charges. This marks a significant shift for Motability Scheme customers, who previously were exempt from VAT on these costs.
Mileage Allowance Reduced
New leases will include 30,000 miles over three years for standard vehicles, and 50,000 miles over five years for Wheelchair Accessible Vehicles. According to Motability, around three out of four customers drive within this new allowance, averaging about 7,500 miles per year. Customers who exceed the allowance will be able to pay for additional miles, and Motability is exploring ways to mitigate the impact for those with exceptional circumstances.
Tyre Replacement Limits
Under the new rules, a three-year lease will include up to six tyres, with a maximum of four for accidental damage. For five-year leases, up to ten tyres are included, with up to six for accidental damage. Motability notes that on average, customers replace two tyres over a three-year lease, and these limits are designed to cover normal wear and tear.
EU Breakdown Cover Changes
Customers can still take their vehicle abroad, but must request a VE103 form from the RAC and pay an administration fee. Fewer than one percent of customers used EU breakdown cover last year, according to Motability.
Motability Operations stated: "We have carefully considered how to protect the core Scheme package, while ensuring the Scheme remains as affordable as possible and sustainable for the long term." The changes are part of the Labour government's efforts to control the rising welfare bill. For existing customers, no changes will apply to current leases. Motability added: "Changes to the Scheme apply across the UK, except in Scotland. We are working closely with Motability Operations and the Scottish Government to understand how these changes may affect customers in Scotland."
