Motability responds to reports about the Government planning tax changes to benefits scheme
Speculation is mounting that the Chancellor Rachel Reeves is considering reforms to the Motability scheme which allows disabled people to access cars through the benefits system.
The Chancellor is looking at scrapping tax breaks worth around £1billion a year, cutting an exemption which allows cars leased under the scheme to be exempt from VAT or insurance premium tax.
BMWs, Mercedes and other luxury cars could also be removed from the scheme, according to The Times.
In a statement Motability commented: “You may have seen news stories about the possibility of tax changes to the Motability Scheme. These reports are based on media speculation and not on any formal announcement.
“If you’re a customer on the Scheme, your price is protected for the rest of your lease, and we’ll continue to deliver our all-inclusive leasing package as normal. We’ll keep you updated if there’s any news that affects you.
“Our focus remains the same: helping disabled people enjoy greater freedom and independence. Whether that’s getting to work, taking children to school, or simply going about everyday life.”
Around 860,000 disabled people use the Motability scheme, which is open to people who claim a qualifying mobility allowance, usually through the Personal Independence Payment (PIP).
Removing the tax breaks would mean more claimants need to make an advance payment for their cars.
Under the scheme, claimants can exchange all or part of their mobility allowance for a vehicle but they most pay up front if the cost of a larger or more expensive vehicle exceeds it.
It is understood that no decision has been taken as Rachel Reeves weighs her options ahead of next month’s Budget.
The Chancellor did however state that she can’t “leave welfare untouched” without hiking taxes and cutting spending on schools and hospitals.
Earlier this year, Motability posted a £564.6 million pre-tax loss for 2024, a decline on the £748m profits it recorded in 2023 despite there being a 14.7 per cent rise in the number of people joining the scheme last year.
