Yes, adding a 20% VAT to Motability Advance Payments will likely make the scheme unaffordable for many vulnerable disabled people, as it will significantly increase upfront costs for vehicles. This change, effective from July 2026, is expected to add around £3,000 to the cost of the cheapest three-year leases, making them financially out of reach for those with lower incomes, such as the median household income of £18,500 for scheme users.
You are confusing two issues. The article posted earlier from Motability that mentioned this huge hike was in response to a suggestion that the government would remove the VAT exemption on the whole lease cost. This didn’t happen. They are ‘just’ charging VAT on the AP, so a car with say a £1k AP will see a rise in AP of £200, plus the insurance premium tax that is also going to be applied to Motability leases.
Many thanks Glos that maybe not too bad then.