The Department for Work and Pensions (DWP) has confirmed that existing Personal Independence Payment (PIP) and Disability Living Allowance (DLA) claimants will be protected from upcoming changes to the Motability Scheme, which take effect from July 1, 2026. These changes primarily impact new leases under the scheme.
Starting on July 1, new leases under the Motability Scheme will be subject to Value Added Tax (VAT) and Insurance Premium Tax (IPT), leading to increased costs. Additionally, the annual mileage allowance for new leases will be reduced from 20,000 miles to 10,000 miles. This revision has raised concerns among MPs and disability advocates.
During a session in the House of Commons, several MPs questioned the Secretary of State for Work and Pensions, Pat McFadden, about the implications of these changes for disabled people, particularly those in rural and semi-rural areas who rely heavily on their Motability vehicles for essential travel such as work, education, and healthcare.
Liberal Democrat MP Will Forster inquired about the department’s review of the impact of reducing the mileage allowance. Labour’s Samantha Niblett and Plaid Cymru’s Liz Saville Roberts expressed concern about potential geographic inequalities arising from the new restrictions. Conservative MP Andrew Snowden also questioned the possibility of exemptions or higher mileage allowances for users with significant healthcare travel needs.
Responding on behalf of Mr. McFadden, Labour MP Sir Stephen Timms clarified that the administration and terms of the Motability Scheme fall under the Motability Foundation and its Board of Governors. He noted that the announced changes affect only new leases, leaving existing contracts and their mileage allowances untouched. Approximately 75% of current scheme users reportedly already drive less than the new 10,000-mile allowance.
The Motability Foundation is aware of the potential impact on some customers and is exploring whether limited mitigation measures can be introduced for those most affected.