As we have already said, the Motability scheme can be a lifeline for people with disabilities. This year, however, it will be changed. There are important dates to remember about the plans, such as the VAT on advance payments, the Insurance Premium Tax, and the removal of some high-end cars from the scheme.
The Motability Scheme Overview
The Motability scheme lets people who get the higher or enhanced rate of the mobility component of disability benefits trade some or all of their payments for the lease of a new car or accessible vehicle. More than 815,000 people benefit from it, and many of them get either Personal Independence Payments or Disability Living Allowance.
Protection for Certain Groups
According to BirminghamLive, the DWP (Department for Work and Pension) will protect some groups of people on PIP and DLA from the crackdown. The changes that are coming will only affect new claimants.
Upcoming Tax Changes
The Labour Government said last year that there would be tax changes that would affect the Motability scheme. And this summer, the program will change to include taxes, mileage, and tires for claimants in an effort to bring down the rising cost of welfare.
Details of New Changes
The changes include a 20% VAT on the car’s upfront cost and a 12% Insurance Premium Tax on the insurance part of the lease. Some of the groups that are being protected are:
- Current Leases: If someone already has a car, nothing will change until their current lease ends.
- Existing Orders: If someone places an order before July 1, 2026, they will lock in the current price and terms, even if the car is delivered after that date.
- For WAV users: Wheelchair Accessible Vehicles are still not subject to the new VAT and IPT tax charges to protect those who need them the most.
Regional Impact
Please note that these changes only apply to the UK-wide scheme for now. The Scottish Government is still looking into how they will affect its AVE (Accessible Vehicles and Equipment) scheme in Scotland.
New Tracker Requirement
Starting in April 2026, all first-time customers, no matter how old they are, must have a “Drive Smart” tracker installed. This was mostly for drivers under 25 before. The changes come after the plan had to pay £300 million in new taxes after last year’s budget.
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