The Motability scheme for disabled drivers and families is changing and users face higher costs.
The business supplies new and nearly new cars to disabled drivers in return for their monthly allowance but now needs to offset £300m of new taxes imposed following last year’s Budget, with some costs passed on to users. They may also have to pay an initial £400 set up fee.
Going forward, the scheme is making changes to mileage allowances, charges for additional mileage and introducing charges if vehicles are taken abroad.
In last year’s Budget, BMW and Mercedes-Benz vehicles became excluded from the programme and Chancellor Rachel Reeves announced the Government would introduce VAT to advance payments for the scheme, and apply insurance premium tax to leases from July 2026.
Motability estimates that the policies will hit the business with £300 million in additional taxes.
