As Budget Day draws ever closer, another area that Chancellor Rachel Reeves is expected to make changes in is the government’s Motability scheme.
Reeves is reportedly planning to cut £1 billion from the scheme in the highly-anticipated budget, coming just as it was announced that premium car brands like Audi, BMW and Mercedes-Benz will be removed from the scheme.
This is despite the fact that these premium cars come at no extra cost to the taxpayer, with disabled drivers footing the bill for the extra cost from their own pockets.
The premium brands also only account for around 40,000, or about 5 per cent, of the 800,000 Motability cars on British roads.
Reeves and Motability have said that the drop in premium car brands will make way for more British-made cars like Nissan, Mini and Toyota.
Motability Operations CEO Andrew Miller said the move will “do even more to support the economy”, adding that the scheme’s commitment “should put British car manufacturing into top gear.”
Here’s a closer look at the Motability scheme and what changes could be on the way after the budget.
What is the Motability scheme and what changes could be made?
In place for the last 30 years, the Motability scheme supports those on mobility allowances, like Personal Independence Payments (PIP) or the Disability Living Allowance (DLA) to lease a car, scooter, or powered wheelchair.
It’s estimated to have helped around 815,000 people across the UK so far. Users can exchange their allowance for a vehicle, offering a cost-effective way to get on the road, with insurance, servicing, and repairs included in one package.
Reeves is reportedly planning certain cuts to the Motability scheme, with the goal of saving around £1 billion per year, which could limit access to some people and remove essential tax breaks.
One tax break that could be removed is the exemption that currently allows users of the scheme to be exempt from VAT and insurance premium taxes.
The lack of this exemption would increase costs for certain disabled drivers, many of whom see their Motability lease as a lifeline to get around, especially in rural areas, as well as to access healthcare and maintain independence.
“I think Motability is incredible,” said one user as part of a survey conducted by Car Wow. “I would really struggle if I didn’t have this option.”
Depending on the cost of the car, VAT can be as much as 20% of the cost of the car, with similar rates at the higher-end of insurance premium taxes.
That’s a significant cost increase, which could mean some disabled people currently using the scheme would no longer be able to maintain their lease.
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