Today, we’re setting out what the Budget announcement means for the Motability Scheme and the people who rely on it. While there will be changes to how the Scheme operates, our commitment to disabled people remains steadfast. We’re focused on keeping the Scheme as affordable as possible, continuing to support access to employment, education and everyday life, and working closely with Motability Operations to ensure the Scheme remains a cornerstone of independence for disabled people - just as it has been for nearly fifty years.
A more sustainable scheme
The Scheme has been impacted by many external influences in recent years such as rising costs, fluctuating second hand car pricing and the large-scale introduction of EVs. Today, the Government has confirmed that VAT will apply to Advance Payments and Insurance Premium Tax will apply to Scheme leases which will take effect from July 2026. These tax changes will mean the Scheme will become more expensive for disabled people but will remain sustainable with a choice of affordable vehicles.
Evolution
As confirmed earlier this week, premium brand vehicles have been removed from the Scheme. The Scheme will focus on vehicles that meet disabled peoples’ needs and represent value and purpose, while still harnessing competition between manufacturers to get good value.
We recognise that any increase in the cost of a lease could have a significant effect on disabled people’s independence and daily life. To minimise price increases for customers taking out a new lease, the Scheme is considering a range of other changes across the leasing package including mileage, overseas breakdown cover, increased use of telematics for insurance purposes and other services. Detail will be confirmed only when the impact to disabled people has been fully assessed. The tax changes will increase the cost of a lease on the Scheme and we anticipate the average Advance Payment (upfront cost) of a vehicle, will increase by around £400 over the three-year package. We will continue to provide a range of around 40 to 50 vehicles available to lease with no upfront payment.
Changes to the Scheme’s package are expected to be introduced from July 2026. Motability Operations, which runs the Scheme, will begin engaging with customers about the proposed changes in spring 2026. Proposed changes to the leasing package will undergo disability impact assessment by the Motability Foundation, which oversees the Scheme, before any changes are approved, announced and implemented. As the Scheme evolves and we fully understand the impacts changes may have on disabled people, the Foundation will also need to consider how its grant programmes best support those most in need.
To more strongly combat the issue of misuse, the Motability Scheme is creating a new Special Investigations Unit. While the overall rate of misuse has remained stable, and the vast majority of customers use their vehicles in the way they are intended, the growth in customer numbers means more cases are being investigated. There are now around 80 people who are dedicated to tackling misuse of Scheme vehicles who join the newly formed Unit. Motability Operations also plans to strengthen data-sharing arrangements with government and police agencies to enable quicker, more effective action where misuse is identified.
Commitment to disabled people
While some change is necessary to ensure future longevity, the Motability Scheme remains committed to our core purpose – providing mobility to disabled people, many of whom have no choice but to use private transport because of inaccessible public transport and infrastructure across the UK. The Motability Scheme commits to:
- No changes for customers in current leases. Changes to the Scheme would relate to new leases.
- Continuing to provide a range of around 40 to 50 vehicles available to lease with no Advance Payment
- Motability Foundation and Motability Operations will continue to subsidise and provide grant funding for the ongoing provision of Wheelchair Accessible Vehicles, while also funding adaptations to support over 82,000 customers with essential mobility solutions.
- Motability Foundation will continue to provide grants to support people with the most profound needs to access the Scheme, having awarded £59.3 million in 2024/25 to help over 10,000 customers benefit from essential mobility solutions.
Nigel Fletcher, Chief Executive of the Motability Foundation, said:
“We understand the challenges disabled people face in accessing reliable and accessible transport, and how important a Motability car is to Scheme customers. The changes to tax reliefs imposed on the Scheme in today’s budget statement mean the Scheme will need to evolve. We are working hard to minimise price increases for customers and are taking steps to assess the impact of potential changes to the leasing package. Our focus remains firmly on protecting the Scheme for those who need it most.”
Andrew Miller, Chief Executive of Motability Operations, said:
“An evolved Motability Scheme will continue to put the disabled people we serve at the heart of everything we do. Changes to evolve the Scheme will involve understanding what matters most to disabled people, working closely with Motability Foundation.”
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