New Charges Take Effect
Ministers are hoping to save approximately £1 billion by 2030 through an overhaul of a programme designed to assist disabled people in obtaining vehicles. The Motability scheme faced increased scrutiny last year after luxury brand vehicles such as BMWs and Mercedes were reportedly made available through it.
Rachel Reeves removed them from Motability at the Budget, and further measures outlined in the autumn are now coming into effect. Motability customers who make optional one-off advance payments for larger and more expensive vehicles will now be subject to VAT and all new leases will be covered by insurance premium tax.
Government's Fairness Argument
Work and Pensions Secretary Pat McFadden said: "Today's changes are driven by the fairness that underpins this Government – fairness for the taxpayer, fairness for disabled people and fairness for the country.
"We're saving £1 billion of taxpayer money by removing VAT relief from some new Motability leases whilst ensuring the scheme still supports disabled people's mobility and independence." He added: "We're building a fair welfare system and an economy that works for everyone."
Impact on Motability Operations
The overhaul comes as ministers endeavour to reform the welfare system in a bid to cut spending and return more people currently claiming sickness benefits to employment.
Andrew Miller, chief executive at Motability Operations, the company that runs the Motability scheme, said: "Tax changes announced in the UK Government's Autumn Budget have significantly increased the cost of running the Motability scheme.
"While we have had to make difficult decisions in response, the changes we are making mean the scheme can keep disabled people connected to freedom and independence now and in the future." He noted: "The scheme continues to offer value for disabled people, including cars with no advance payment in addition to their weekly payments."
