Motability Scheme issues new update for people on PIP or other disability benefits – Daily Record
Speculation is growing that Chancellor Rachel Reeves is considering removing insurance and tax breaks for the Motability Scheme, which allows people to exchange all or part of their enhanced mobility award from a qualifying disability benefit such as Personal Independence Payment (PIP) or Adult Disability Payment (ADP) – for a lease on a car, powered wheelchair or mobility scooter.
It’s important to understand that nobody using the Motability Scheme gets a ‘free car’ and most of the 815,000 people with a current lease – including around 80,000 in Scotland – often have to make an additional up-front payment.
The Motability Scheme has now issued advice to all users, offering reassurance that there has been no changes and should any be announced at the Autumn Budget, their prices will be protected for the duration of their lease.
A new post on the Motability website states: “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, we’re here to support you.”
Minister for Social Security and Disability Sir Stephen Timms recently confirmed that the Motability Scheme receives no direct funding from the Department for Work and Pensions (DWP). However, in a written response to Edinburgh South West MP Dr Scott Arthur, he explained that for the 2024/25 financial year, the total value of benefits transferred by the DWP to the Motability scheme was £3,074,920,421.67.
Sir Stephen continued: “The Motability Scheme receives no direct funding from DWP. However, it does receive the direct transfer of benefits from DWP. This is claimant benefit the claimant would otherwise be receiving, and the cost of transfer is paid for by the Motability Foundation.
“The Motability Scheme also receives zero rate VAT for hire of motor vehicles to individuals in receipt of specified disability benefits,: zero rate VAT for sale of lease vehicle on first sale after end of lease and zero rate Insurance Premium Tax (IPT) on Scheme policies.”
Scotland's Social Justice Secretary Shirley-Anne Somerville has urged the UK Government to abandon possible VAT and insurance tax changes affecting the Motability scheme, ahead of the Autumn Budget on November 26.
In a letter to the Secretary of State for Work and Pensions Pat McFadden, Ms Somerville said the change could significantly increase vehicle costs for nearly 88,000 disabled people and carers in Scotland who rely on the scheme to meet their mobility needs.
Ms Somerville said: “I am deeply concerned about the content of these proposals, and I am disappointed that we have not been consulted on these proposed changes for clients in Scotland. You will be aware that we have our own scheme in Scotland called the Accessible Vehicle and Equipment (AVE) Scheme.
“Motability is currently the only active provider under the AVE Scheme and has 87,843 customers in Scotland many of whom are disabled people or carers. These proposals will cause significant fear and uncertainty for disabled people who rely on the Scheme to remain mobile and affordably lease a vehicle with no credit checks.
“Should the changes to the VAT arrangements be implemented by the UK Government, Motability has indicated that the advance payments for vehicles could increase significantly for disabled people at a time when household budgets are already under significant pressure. Whilst the AVE Scheme is devolved, the tax arrangements are not and it is concerning that the Scottish Government has not been consulted.”
The Motability Scheme and the Accessible Vehicles and Equipment Scheme for people in Scotland, enables those in receipt of a disability benefit, with an award for the higher or enhanced rate of the mobility component, to transfer some or all of the payment to lease a new car, wheelchair-accessible vehicle, scooter or powered wheelchair.
The Autumn price list for leasing packages on the Motability Scheme website shows there are nearly 900 vehicles available to lease.
People on benefits such as PIP, ADP, Disability Living Allowance (DLA), Scottish Adult DLA, War Pensioners’ Mobility Supplement (WPMS) and Armed Forces Independence Payment (AFIP) can join the scheme.
A full list of qualifying benefits and award level required can be found on the Motability website here.
As well as a new car, customers also benefit from insurance, breakdown assistance, servicing, maintenance, tyres and windscreen repairs as part of the package.
If you are choosing a car or wheelchair-accessible vehicle, it’s important to be aware that while some only use part or all of the mobility award payment, most require an advanced fee which can range from between £100 and £2,000.
Chancellor Rachel Reeves will deliver the Autumn Budget in Parliament on November 26.
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