Disabled people are "deeply concerned" they could face a financial hit amid speculation chancellor Rachel Reeves could announce changes to the Motability car-lease scheme in the Budget next month.
Motability offers financial support to some disabled people to help them lease a car or make accessibility adjustments to their current vehicle. It has come under the spotlight in recent weeks as reports suggest the government is seeking further cuts to benefits.
The Times recently reported that the upcoming Budget could see Reeves removing VAT tax exemptions for the scheme, which would mean Motability users spending an average of £3,000 more per year to loan an adapted vehicle.
The chief of the Motability scheme, Nigel Fletcher, told BBC’s Access All podcast on Wednesday that disabled people have been contacting the scheme “worried about the speculation,” but if the cuts go ahead, the foundation is determined to do everything “to absorb the costs”.
Asked about potential Motability cuts earlier this week, disabilities minister Sir Stephen Timms told the Commons, “there will be no changes to the eligibility conditions until the conclusion of the PIP review,” which will report back in autumn 2026. However, this does not rule out scrapping VAT exemptions for the scheme,
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But disability campaigners have warned any cuts to the scheme would be another blow for disabled households, who are living on less than half of the average UK salary. The cuts would be another headache for those already facing dwindling support when universal credit cuts come into effect in 2026.
The focus on Motability follows repeated criticism of the scheme by the Conservative Party in recent months, including one misleading statement made at the Tory conference by a senior shadow minister that "millions of people" were "getting free cars" for conditions like anxiety and ADHD.
On Wednesday, Reform MP Lee Anderson said the scheme had got “completely out of hand”. He added: “I remember back in the day if you were on disability and you wanted a car on the state it was a blue three-wheeler. What’s wrong with that? Let’s go back to that.”
Anderson appeared to be referring to Invacars, which were banned from UK roads in 2003 on safety grounds.
Here, Yahoo News explains what the Motability Scheme is all about and how many people in the UK claim it.
What is the Motability scheme?
The Motability Scheme is a charity-run programme that allows eligible disabled people to use their PIP benefit mobility payments to lease a car or make adaptations to their current vehicle. It can also be used for people to lease a scooter or powered wheelchair.
The scheme gives disabled people who struggle to travel greater independence at an affordable rate.
Anyone using the scheme makes fixed weekly payments, which cover the lease, the vehicle's car insurance, MOT, vehicle tax, and tyre and windscreen repairs.
Who is eligible for Motability?
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To qualify for Motability, a person must get the higher rate of mobility support through adult disability benefit payment PIP, child disability benefit payment DLA, or the armed forces independence payment (AFIP).
To qualify for the higher (enhanced) rate mobility component of these benefits, a person must undergo a benefits assessment to demonstrate they have major difficulty either physically moving around, or planning and following journeys.
This could mean they cannot walk more than 20 meters without stopping, or they cannot plan or undertake any journey unaided due to physical or mental challenges.
It could also mean they have severe mental health difficulties that make journeys impossible to undertake alone, or extreme difficulty with orientation or safety.
What would a VAT exemption mean for Motability claimants?
At a time when the government is under pressure to make savings, scrapping the VAT exemption on the Motability scheme would mean the government could potentially raise up to £1bn annually in extra tax revenue.
But adding a 20% tax to Motability vehicles would put increased financial pressure on disabled households. The median household income of a disabled person using the Scheme is around £18,500 – about half the UK average.
The VAT would significantly increase the overall lease cost by £3,000 to £6,500 per vehicle lease, the Disability News Service reported.
"Eliminating these tax breaks could impose additional financial burdens on disabled individuals across Britain. Limiting access to Motability could severely impact those with lower incomes," James Taylor, the strategy director at the charity, said.
Motability’s Nigel Fletcher said that the reports would cost disabled people “thousands of pounds”.
He said the scheme would look to absorb some of those costs through “reduced service and propositions” - this could impact some of the existing measures offered, such as insurance, roadside assistance, tyres and service and maintenance.
“The Motability scheme is a package of a lot of different measures,” he told the BBC. “There’s a lot of elements to the scheme that cost money, so we’d have to take a long, hard look at those.”
Motability has reassured current leaseholders that even if the tax breaks are removed in the Budget, their prices will be protected for the duration of their lease "as normal".
Do Motability claimants really get free cars?
The focus on Motability Scheme follows repeated criticism of the scheme by the Conservative party.
At the Tory conference in October, shadow work and pensions secretary Helen Whately claimed that "millions of people" were "getting free cars" for conditions like anxiety and ADHD.
Conservative leader Kemi Badenoch has also been vocal, saying she would “restrict Motability vehicles to people with serious disabilities”, adding that the “cars are not for people with ADHD”.
Disability campaigners have criticised the claims, pointing out that only 860,000 people claim the scheme in total.
In fact, according to Tom Waters from the Institute for Fiscal Studies, the maximum number of people with ADHD or similar anxiety disorders who are claiming through the scheme is closer to 190,000 people — if that.
"If we look at the number of people who are working age who are getting disability benefits, there's a little bit less than 600,000 people who are getting it for things like anxiety disorders and ADHD," Waters told the BBC’s More or Less programme.
"Of those, about a third or so — about 190,000 — get what’s called the enhanced mobility element of the benefit. That’s what’s required to get a car through Motability. It’s worth noting not everyone who gets that will have a car, but that’s the minimum requirement."
Waters also pointed out that some people with ADHD might also have several other health conditions that enable them to claim for Motability.
In addition, no Motability claimant gets a "free car” - people must use some of their existing benefits payments to take out a car.
PIP claimants pay on average £12,000 to lease a vehicle from the scheme, which is directly deducted from their mobility payments.
Each person has to make an upfront payment before they take out a lease.
A DWP spokesperson said: “Motability is independent of government and is wholly responsible for the terms and administration of the Scheme, including determining what types of vehicles they use.
“The scheme comes at no additional cost to the taxpayer, and customers claiming benefits such as PIP must use some of their existing payment to lease a car.”
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