Having had its success with a partial introduction of VAT on Motability vehicles, GB News is already announcing through its Facebook account, Reeves is working on removing all VAT exemptions from Motability vehicles. I feel if there’s no end to the scheme in the near future, then after the next election both the scheme and PIP as we know it are pretty much doomed.
From my POV, the scheme will have to change and through these changes its main customer base will decline and eventually be there to serve WAV customers, as its main purpose ( will remain zero-rated for VAT and exempt from Insurance Premium Tax (IPT).
Those that don’t need or can get around not having WAV, were already getting disgruntled at high AP’s and whispers were being heard about more a more wanting to leave the scheme. The additional cost to charge VAT on AP, which could easily add another £1000 or more on to a vehicle with ever increasing AP’s, is going to make users think twice about the value of staying on the scheme, compared to buying a vehicle of their own and in some cases using the sacrified benefit to run it, with the hope half of that can be saved, to get a better vehgicle in three years time, with a deposit, which would otherwise have been an AP. Of course, there are people on the scheme, who can just go and buy a new car, but no matter where you sit financially talk is getting is only getting louder on leaving.
In the same breath Motability’s “worry free motoring” slogan, is starting to unpick faster than a MG 7 year warranty. Then, theres the untold effects to both the new and used car market, which is a topic for another day.
I guess, what suprises the most is a media briefing by MO, is it recognises that any rise in the cost of a lease could have a significant impact on disabled people’s independence and daily life.
Who have suggested 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. These proposed changes will only be confirmed once a full assessment of their impact on disabled people has been completed.
As a result of the tax changes, the organisation anticipates the average Advance Payment (upfront cost) of a vehicle, will increase by around £400????. The Scheme will continue to provide a range of around 40 to 50 vehicles available to lease with no upfront payment and these vehicles will be exempt from the new VAT rules.
https://news.mo.co.uk/news/vat-and-the-scheme