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As we all know now, from July the annual mileage will be halved to 10,000 miles per annum and the excess will be heavily charged – 25p per mile.
Will the forum agree, that despite adding VAT to the advanced payment, the AP will be lower due to this significant mileage redaction?
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Apologies for briefness and spelling mistakes.Motability Skoda Enyaq SportLine 85x April 2024 (unhappy customer - Ombudsman pending)
Motability Mazda CX-60 PHEV July 2023 (unhappy customer - early termination on mechanical grounds)
Motability VW Touran Family Pack May 2019 (happy customer)
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sorry but i doubt it, the mileage reduction will reduce the overall insurance cost which may cover the cost of the insurance premium tax but i doubt it will also reduce the ap and reduce or cover the 20% vat as well.
My rather cynical nature thinks the whole reason behind the BS rises this quarter includes a large dose of “we were right” when the prices drop next quarter.
Unfortunately I suspect the 100% lift could well be met with a 70% drop in July and an announcement of success at keeping prices low despite a 30% lift in 6 months. (All number guesswork but the general gyst works).
I'm Autistic, if I say something you find offensive, please let me know, I can guarantee it was unintentional.
I'll try to give my honest opinion but am always open to learning.Mark
In a word, No.
There’s a chance that the massive AP hikes this quarter may be some of the July changes brought forward, to stop a flood of early terminations and new leases commencing before the lower mileage limits, so we may have already had the worst by now, but I think that expecting overall price drops in July is wishful thinking. There may the the odd individual model (as there always is) but I suspect that the upward trend of the last 2 years will continue.
No (and without being awkward)
The law changes to enable the VAT are quite clear, all cars leased from 1st July are subject to VAT, regardless of when they were ordered.
So while all cars ordered after July 1st will attract VAT (save the usual exemption) some ordered this quarter will also attract VAT.
That all depends on when dealers can deliver, so many APs are probably higher than they should be now to absorb some of that potential VAT. It’s probably on higher AP cars, and those that are most likely not to be delivered until after July 1st; another reason for the Enyaq increase.
I also suspect to keep things simple next quarter there will still only be one AP per VIN; those that don’t have to pay due to significant adaptions and a fulltime wheelchair user will have their AP reduced after their application hits pending
Lets not forget the windfall £250 we received from Motability for reduced mileage during the covid lockdowns.
That gives an indication of the savings incurred from a reduced annual mileage. Was it £250 or more than that??
Lets not forget the windfall £250 we received from Motability for reduced mileage during the covid lockdowns.
While true it’s important to note that rebate wasn’t just for the reduced mileage; a parked car can still be involved in an accident.
The significant factor that allowed that rebate to be paid was due to the reduced amount of accidents from the road network having an extremely reduced volume of traffic.
More specifically it was due to the amount of accidents involving injury to multiple parties, which is where things get really expensive for insurance companies. Repairing a car is cheap compared to covering emergency service fees, medical bills, and significant life change payouts.
As a small, possibly interesting aside, the restrictions on leaving home during lock down were both to stop transmission contact frequency, and more importantly to significantly decrease the amount of serious injuries on the road and at places of work which can overwhelm hospitals even on a quiet day.
Mileage adjustment will be negligable in comparison to adding VAT/IPT
Don’t forget our friend Racheal and her PHEV/EV tax 1.5/3p per mile.
Unfortunately I have suffered a brain injury and occasionally I get confused and often say the wrong thing.
That’s 2 years away if it even happens and is only at the green paper / consultation stage. Far too much could happen in 24 months.
However if it happens, it would only apply for approximately 12 months of any leases that go in-life from now as the first 2 years won’t be affected.
But if you plan to do 10,000 miles in the final year, make sure you put £300 aside to pay for it.
I did post and predict Q2 AP may increase to soft the blow of Q3, I probably not too far of the mark, however, we could always have our usaual quarteley AP price hike plus 20% VAT.
I can see pressure on the Mobility scheme from this Government, where the scheme is only feasible to adapted vehicles only. That should keep Joe Public happy.
Unfortunately I have suffered a brain injury and occasionally I get confused and often say the wrong thing.
I did post and predict Q2 AP may increase to soft the blow of Q3, I probably not too far of the mark, however, we could always have our usaual quarteley AP price hike plus 20% VAT. I can see pressure on the Mobility scheme from this Government, where the scheme is only feasible to adapted vehicles only. That should keep Joe Public happy.
Who defines “adaptable”? I drive with left foot accelerator – is my vehicle “adapted” enough?
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Apologies for briefness and spelling mistakes.Motability Skoda Enyaq SportLine 85x April 2024 (unhappy customer - Ombudsman pending)
Motability Mazda CX-60 PHEV July 2023 (unhappy customer - early termination on mechanical grounds)
Motability VW Touran Family Pack May 2019 (happy customer)Who defines “adaptable”? I drive with left foot accelerator – is my vehicle “adapted” enough?
For a vehicle to be sold VAT Free the following conditions must apply:
• The vehicle must be substantially and permanently adapted
• The disabled person must use a wheelchair in order to be mobileA vehicle is adapted for a disabled wheelchair user if it is substantially and permanently adapted to
meet the specific need of that person’s disability and the adaptation is necessary and:
• allows the disabled person to travel in the vehicle
• allows the disabled person to leave the vehicle
• allows the disabled person to drive the vehicleTrying (for one moment) to look on the bright side, it’s worth reminding anyone who is not all over this that the VAT will only apply to the Advance Payment and not the core lease. In other words the £13,000 that we pay for the core lease (even for a car with zero AP) won’t be subjected to £2,600 VAT, as Motability’s block VAT exemption on the core lease remains.
Furthermore, It doesn’t necessarily follow that all current APs will rise by 20% next quarter. As I understand it, the reduction in mileage allowances, removal of overseas cover, tyre limits etc have all been introduced in order to help offset some of the impact of the VAT on APs and the 12% Insurance Premium Tax.
For all we know, the changes made so far could result in a much lower hike to APs of say 5-10% which, given what we’ve been experiencing over the past 2 years, will seem like a normal new quarter 😂
No (and without being awkward) The law changes to enable the VAT are quite clear, all cars leased from 1st July are subject to VAT, regardless of when they were ordered. So while all cars ordered after July 1st will attract VAT (save the usual exemption) some ordered this quarter will also attract VAT. That all depends on when dealers can deliver, so many APs are probably higher than they should be now to absorb some of that potential VAT. It’s probably on higher AP cars, and those that are most likely not to be delivered until after July 1st; another reason for the Enyaq increase. I also suspect to keep things simple next quarter there will still only be one AP per VIN; those that don’t have to pay due to significant adaptions and a fulltime wheelchair user will have their AP reduced after their application hits pending
Explain how some cars ordered this quarter before the 1st of July will attract vat to the Advance Payment.
As far as I am aware any car ordered before the 1st of July no matter when delivery takes place will not have vat added to the AP
Who can answer – ultimately a judge, or at the very least a first tier tax tribunal panel. There’s not currently much case law on the matter, and very few cases that have set a precident
HMRC and Motability may have a view, which may sometimes be right. Many on here will also have a view, that may also sometimes be right 😉
However the key point for the adaptions themselves in the actual legal text is the phrase substantially and permanently adapted which raises the question of who/how are substantially and permanently adapted defined, especially as the adaptions are removed at the end of the lease for onward sale where possible.
Steering wheel balls, and Lynx hand accelerator controls have both been deemed not to be permanent as they are easily removable by the end-user / car hire technician and the car can be used immediately after removal without any further modifications.
Wheelchair ramps, for WAV conversions certainly do. As do tillers and joysticks that remove the steering wheels.
Bolted onto the car devices like person-hoists and equipment stowage hoists have been approved for some of our clients in the past by HMRC.
So pondering a left-foot accelerator … that might depending on the type.
If it’s one that is electrically connected, then probably;
if it requires the manufacturer’s original to be removed, also probably;
If it is clipped onto the original ….. maybe not. Sorry that may not be what you want to read.
But that’s just me pondering on a quiet bank holiday, and without running it past our legal team, HMRC or other party that could offer a ‘professional opinion’
But I return to my original point – there are always legal rights to challenge decisions, and they should always be taken if your adaptations are declined.
Glady,
First it’s very important to note that an AP agreed is fixed for the customer at the point of application.
The point I was making was that for Motability they will have VAT to pay on any lease started after 1st July 2026. That means the payments for everything but the core lease will attract VAT for the life of the lease. This means overages on tyres, breakdowns, mileage etc will have VAT applied even if the application happens before the 1st July
So taken from the Terms and Conditions book of leases from 1st April 2026:
Section 2:
The Total Advance Rental Payment is
inclusive of VAT (where applicable) and payable
upfront. This is not a deposit and is not refundablePayments to be made:
Where VAT is chargeable in accordance with
applicable law, it will be included in, or added to,
the relevant payments under this Agreement.
Whether VAT applies, will depend on the type of
vehicle, your eligibility for VAT relief and the date
the vehicle is supplied, as explained in the PreContract Information.Gov.UK – VAT and Insurance Premium Tax: change to reliefs for qualifying motor vehicle leasing schemes
This measure will apply the standard rate of VAT to top-up payments on leases of motor vehicles through qualifying schemes for the use of disabled people. Where payments are made through benefits, VAT will continue not to apply.
Insurance Premium Tax will apply at the standard rate of 12% to insurance on new vehicle leases through qualifying schemes.
These measure will take effect from 1 July 2026.
These tax changes will not apply to vehicles designed or substantially and permanently adapted for wheelchair or stretcher users.
Gov.uk – Motabilty Scheme: Reforming Tax Reliefs
Operative date
The measure will have effect from 1 July 2026 and will apply to new leases of vehicles from that date.It’s important in all of this to remember that the legal status of the lease only starts when the PIN is entered. There is no lease before that point.
Hope that helps
Motabilty have shared this table to show the dates when things change.
Note the middle column is for cars applied before but delivered after 1st July.
HMRC and Motability may have a view, which may sometimes be right.
Why would HMRC only smetimes be right, when enquiries are directed to the HMRC and the hepline is the HMRC?
No (and without being awkward) The law changes to enable the VAT are quite clear, all cars leased from 1st July are subject to VAT, regardless of when they were ordered. So while all cars ordered after July 1st will attract VAT (save the usual exemption) some ordered this quarter will also attract VAT. That all depends on when dealers can deliver, so many APs are probably higher than they should be now to absorb some of that potential VAT. It’s probably on higher AP cars, and those that are most likely not to be delivered until after July 1st; another reason for the Enyaq increase. I also suspect to keep things simple next quarter there will still only be one AP per VIN; those that don’t have to pay due to significant adaptions and a fulltime wheelchair user will have their AP reduced after their application hits pending
Explain how some cars ordered this quarter before the 1st of July will attract vat to the Advance Payment. As far as I am aware any car ordered before the 1st of July no matter when delivery takes place will not have vat added to the AP
I agree
Thais what I thought and from motorbility web site
What does this mean for you
If you order before 1 July 2026
There will be no change to the terms of the agreement we sent when you ordered your car. You can find details of your terms and conditions in your online account or in the letter we sent to you shortly after you ordered your car.If you collect your car after 1 July, you might need to pay VAT on some payments, such as excess mileage or early termination fees.
Your Advance Payment will not change, no matter when you collect your car. Our price freeze means the price at the time you apply is locked.
If you order on or after 1 July 2026
Your lease agreement will include details of the payments and whether standard rate VAT is being applied.If you’re ordering a vehicle that meets the HMRC criteria for VAT concession your dealer will ask you to complete a Customer Eligibility Declaration to confirm you normally use a wheelchair or stretcher.
@kezo If I am understanding that table correctly, we won’t have to pay VAT on our Early Termination Fees as the contracts commenced prior to the changes?
@kezo If I am understanding that table correctly, we won’t have to pay VAT on our Early Termination Fees as the contracts commenced prior to the changes?
No – column 1 (before July 26) VAT on some in life costs.
That is very badly worded but I see from how that’s written why it’s caused confusion.
If you have a £750 AP car ordered on 1st May and it’s handed over on 10 May you would pay £750 to Motabilty. No VAT as it’s before 1st July.
If you have a £750 AP car ordered on 1st May and it’s handed over on 2nd July you will pay Motability £750. Motabilty will keep £625 and pay HMRC £125; VAT needs to be paid as handover is after 1st July but the customer won’t pay any more to Motability.
The terms they refer to very clearly state that VAT will be applied based on the date of handover – I’ve posted the exact text above.
The Kia mobility salesperson who is also disabled explained it easy understanding terms both to my wife and myself. If I was to order before the 1st July we will not have to pay VAT full stop even if I collect the vehicle after the 1st July I will still pay the same price no VAT. Also as I am over 30 no drive smart and 20,000 miles.
If you place an order after 1st July you will be subject to all the new changes including VAT.
Unfortunately I have suffered a brain injury and occasionally I get confused and often say the wrong thing.
Not sure if I’m supposed to share this as it’s taken from the Motability partner website (so what Dealers / Adaptions /Support workers etc are supposed to tell the customer).
It’s essentially the table above but hopefully a little clearer.
Again, it doesn’t change what you are paying to Motability for the AP but it does mean that on some level Motability has had to already increase the AP this month to ensure they can pay VAT on cars that will be subject to it.
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