All the new Motability reforms - from tax hikes to mileage limits

Motorists will be hit by new taxes and mileage regulations from today as the Government raises the costs associated with having a car for disabled people.

The changes will come into force on Wednesday, with VAT now levied on advance payments for more expensive vehicles, a new 30,000-mile cap and steeper penalties for drivers who exceed that limit.

It comes as part of wider steps to slash rising costs, with luxury car models, such as BMWs and Audis, already having been removed from the scheme following pressure on the Government to offer only mainstream brands.

Ministers hope the new tax rules will save £1bn by 2030, with the reforms intended to ensure “fairness for the taxpayer”, according to Work and Pensions Secretary Pat McFadden.

But benefits claimants who say they rely on cars leased via the Motability Scheme for their independence have branded the charges a “direct attack” on disabled people.

The scheme leases vehicles to disabled people on some mobility benefits, including the highest level of personal independence payment (PIP). With rising numbers of people becoming eligible in recent years, it now supports more than 915,000 people, according to the Motability Foundation.

Here’s everything you need to know about all the changes.

From today, the Government is applying 20 per cent VAT to advance payments on new orders.

This is an optional upfront payment ranging from a few hundred pounds to several thousand that a Motability customer must pay if the vehicle they want costs more than can be covered by their mobility benefit alone.

It means the average advance payment of a vehicle will increase by around £400 over the three-year package, according to the Motability Foundation.

Some motorists previously told The i Paper that they are at risk of losing their car due to the “cruel” extra charges.

But ministers have confirmed that VAT will not be added to wheelchair accessible vehicles and there will still be a range of around 40 to 50 options with no requirement for an upfront payment.

Most new Motability Scheme leases will also include Insurance Premium Tax (IPT) at the standard rate of 12 per cent.

This will apply to the comprehensive insurance package included with most new Motability vehicle leases.

Like with VAT, vehicles designed for wheelchair users will be exempt from the changes and remain IPT-free.

As well as higher costs for some motorists, new Motability leases will be subject to a 30,000-mile cap over three years, with steeper penalties for drivers who exceed the limit.

The mileage allowance for new orders has been slashed in half from an average of 20,000 miles a year – or 60,000 miles over three years – to an average of just 10,000 miles a year, or 30,000 over three years.

The new mileage allowance for a wheelchair accessible vehicle will be 50,000 miles over a five-year lease.

Excess mileage charges have also increased, rising from 5p to 25p per mile – now including standard rate VAT.

The increase will be to 21p a mile if your lease is eligible for VAT exemptions, such as a wheelchair accessible vehicle.

Motability users will no longer benefit from unlimited tyre replacements under new restrictions.

Customers can still get replacements as long as they are “within fair use”, but those with a new three-year lease can only yet six tyres, or up to four for damage.

Those with a five-year lease can get 10 tyres, or up to six for damage.