July brought a batch of rule changes that will affect drivers’ wallets and how they keep vehicles on the road. From tax shifts that touch Motability leases to new charges at MOT centres, motorists need to know which updates could change their bills or waiting times.
Big change for Motability leases: VAT and insurance tax now added
From 1 July 2026 most new Motability leases will face extra taxes. The government has confirmed that VAT and Insurance Premium Tax will apply to many new arrangements.
- Top-up payments for higher-spec cars will attract 20% VAT.
- New mileage limits have been set for certain lease lengths.
What the new limits mean
- Three-year leases now have a mileage cap of 30,000 miles.
- Five-year leases for wheelchair-accessible vehicles are capped at 50,000 miles.
Motability’s leadership says the organisation is managing costs to protect affordability and keep the scheme sustainable. Negotiations in Scotland have delayed the rollout there, so customers receiving payments from Social Security Scotland will see changes from September.
Vehicle tax updates: a temporary VED break for some heavy trucks
One short-term tax relief has been put in place for certain heavy vehicles. Between 1 July 2026 and 30 June 2027 a range of HGV classes will pay a nominal charge.
- Owners of heavy goods vehicles above 3,500kg in specified tax bands will pay just £1 for that period.
At the same time, ministers have dropped plans to force extra mileage checks on cars under three years old. Fleet and leasing rules were also simplified to reflect modern fleet management practices.
MOT centres to increase maximum service fees
The Driver and Vehicle Standards Agency has moved to raise the ceiling on what authorised testing facilities can charge for use of their docks.
- New maximum service charges: £70 for heavy goods vehicles.
- £50 maximum for trailers.
- £90 for buses and coaches.
Industry responses to the consultation showed overwhelming support from testing stations and many vehicle operators, prompting the DVSA to approve the higher limits.
Car finance redress scheme put on hold as legal battles continue
The Financial Conduct Authority has partly suspended its motor finance compensation scheme while it awaits court decisions. Legal challenges will be heard soon.
- Challenges are scheduled to be considered by the Upper Tribunal later this year or early next year.
- Organisations bringing cases include consumer groups and several major finance providers.
The FCA warns that if the litigation is protracted, motorists seeking compensation could face delays stretching into 2028 or beyond.
Other developments drivers should watch
- BYD hits a UK sales milestone and is preparing a line-up of new model launches.
- DVLA action: a recent prosecution against an 86-year-old pensioner over an unpaid tax of £3.34 has drawn attention to enforcement practices.
- UK car production has fallen, prompting industry calls for urgent measures to protect around 188,000 jobs in automotive manufacturing.
Similar Posts:
- Motability warns of changes arriving in days: new mileage limits, fees and prices hit thousands
- Driving law shake-up in July: major Motability rule changes and new MOT test charges
- Motability users hit with stricter car insurance rules
- Drivers face 75% car insurance hike after Motability budget cuts
- Motability changes due in months: disabled drivers warn of severe impact
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