The Department for Work and Pensions (DWP) has confirmed that some individuals receiving Personal Independence Payment (PIP) will be exempt from a planned £400 charge related to the Motability Scheme. This announcement follows changes implemented in the November Budget, which introduced Value Added Tax (VAT) on Advance Payments and Insurance Premium Tax (IPT) on vehicle leases starting July 2026.
Advance Payments, which cover the initial cost of leasing a vehicle through Motability, are expected to rise by around £400 for standard three-year agreements. Despite these increases, Sir Stephen Timms, the DWP minister responsible, emphasized the government’s commitment to supporting disabled people and their families.
He stated, “The Motability Scheme remains a vital resource, enabling disabled individuals to lease cars, scooter, or wheelchair-accessible vehicles using their disability benefits. While tax changes were implemented swiftly, the government consulted closely with the Motability Foundation to understand the impact and to protect the interests of scheme users.”
READ MORE: Former Birmingham Day Centre for Vulnerable Adults to Be Redeveloped as Retail Store Amid Council’s Financial Crisis
READ MORE: Royal Mail Issues Warning: Christmas Deliveries Not Guaranteed in 92 UK Postcodes
Motability Operations has assured that a broad selection of vehicles will continue to be offered without requiring an Advance Payment, allowing users to access vehicles that best meet their needs without extra upfront costs. The Motability Foundation will also maintain means-tested grants for those who need financial support to cover advance payments or vehicle adaptations.
Sir Stephen Timms added, “The Budget reforms will make the scheme more equitable for taxpayers while preserving access to affordable, accessible vehicles. VAT reliefs and IPT exemptions will persist for existing leases and for specially adapted vehicles designed for wheelchair or stretcher users.”
In summary, although some charges on the Motability Scheme are increasing due to new tax measures, targeted exemptions and financial support will help ensure that disabled people retain access to essential mobility options without undue financial burden.