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She didn’t mention this in her speech (or was it amongst all the other crap?), – the ‘AP Tax’ as well as 12% on Insurance Premium Tax:
From the budget document:
Source- the 2025 Budget Document:
Just when you think Labour cannot get any worse! They really have been the Tories on STERIODS … We so badly need a change from the Status Quo
What is the new mileage limit please? I can’t find reference to it anywhere. Will it apply immediately, or from a future date? Will it affect existing leases?
What is the new mileage limit please? I can’t find reference to it anywhere. Will it apply immediately, or from a future date? Will it affect existing leases?
I don’t think we know yet.
From the budget document:
Will the VAT exclusion be on Mobility Scooters as well on the scheme or VAT exempt if you buy or lease elsewhere.
I’ve just done a word search on the 150 page Budget Red Book for every mention of Motability, and the results are that the changes (which will ‘save’ the exchequer £1bn over 5 years) are;
1) Removal of luxury brands (Note – as we know, they are premium brands, not luxury, and this won’t save the exchequer any money whatsoever).
2) VAT relief to be excluded from Advance Payments from July, unless the car has substantial and permanent modifications for wheelchair or stretcher users (the same rule that applies to VAT exemption on private new car purchases)
3) Annual mileage limit to be reduced to match personal leases
4) Overseas breakdown cover to be removed.
5) The cost of Insurance Premium Tax at 12% to be added to leases
So, in summary, points 2 and 5 will increase APs, point 1 reduces choice and points 3 and 4 remove some of the things that help to make Motability very attractive.
Then, of course, there’s the new tax of 3p per mile for EVs and 1.5p per mile for PHEVs, although that affects everyone, not just Motability customers.
I can’t get terribly exercised over all of this, as yesterday’s removal of premium brands was the final decider that our current Motability car will be our last. It’s not a scheme for us any more.
Apparently some disability organisations are going to fight this in the courts as it affects most vulnerable and also she never upped the tax allowance still set at £12570 which will affect low paid and pensioners who are not wealthy so bad all round.
If we start getting charged separately per mile on an EV then mine will be going back. There is no benefit of owning one now so i might as well buy the Porsche 911 i wanted instead now im retiring.
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Hyundai Ioniq 6 Ultimate trim
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Loves 3D printing & Plastic model kits
----------------------------Ditto what Glos Guy says, almost certain this is our last car. It really does seem there’s a focused attack on Motability and the disabled, you’ve got the budget changes and then that website that identifies (points at) people with disabilities who use a Motability car.
We’ll get a 2 year old car that’s clearly not a Motability car, probably an Audi or Tesla.
Enyaq EV
Could have been worse. VAT on AP is one thing, VAT on the whole lease something different.
Indeed, although VAT on the whole lease would have put Motability out of business, as it’s what gives them the competitive edge over the normal lease companies where people aren’t subject all the restrictions (choice of cars etc).
If we start getting charged separately per mile on an EV then mine will be going back. There is no benefit of owning one now so i might as well buy the Porsche 911 i wanted instead now im retiring.
They are saying that EV drivers will still only pay half the duty that drivers of ICE cars pay so, as long as you can charge at home, you should still be better off with an EV. It also doesn’t start until 2028, so your current EV won’t be affected.
Perhaps surprisingly, Motability never showed any real backbone in defence towards the scheme or towards any other actions that have affected it or its members recently.
The removal of VAT relief from Advance Payments (unless substantially adapted), in particular, is going to be a deal breaker for many of us, as the minimum spec being disabled, I’d imagine, requires heated seats/heated steering wheel, which in almost all cases command an AP.
Insurance Premium Tax at 12% to be added to leases, though not sure how this will happen exactly – as sacrified mobility component won’t include it.
And of course those who are disabled and like a little bit of enoyment in life, will mostly see this enjoyment taken away!
Whether this will open any form of competition, I don’t know, but I’m afraid I’m out!
From the horse’s mouth:
The Motability Scheme addresses the market failure in the provision of suitable transportation for disabled people – from limited access to cars to the cost of adaptive vehicles and access to insurance.
There is a transport accessibility gap today. The difference between journeys undertaken by people with mobility difficulties and those without has been stuck at around 38% for a decade.
Public and commercial transport options for disabled people are still inadequate, reflected in the concentration of Motability customers in suburban or rural areas (81%).
VAT
UK VAT law (VAT Act 1994) includes provisions specifically designed to support disabled people by zero-rating vehicle leases and end-of-lease disposals where they are linked to mobility benefits.
100% of the money saved from the VAT zero-rating goes to disabled people who lease vehicles on the Scheme – it is a targeted support for disabled people that we administer on behalf of government. This scheme is designed to operate with a small margin assuming the VAT relief is in place. Any money made from the Scheme goes back into disabled people’s mobility.
The Scheme’s structure is fully compliant with VAT law, with strong oversight from HMRC and DWP.
Changing VAT on leases
Without any changes to the Scheme’s features to reduce costs, introducing VAT for Scheme vehicles would raise costs and exclude people from the freedom and independence the Scheme provides.
A spokesperson for the Motability Scheme said:
“The Motability Scheme exists to enable freedom and independence for disabled people. Every pound of VAT relief is passed directly to disabled customers, many on low incomes, to make mobility affordable. Introducing VAT on leases risks making cars unaffordable for disabled people, leaving only the wealthiest able to access the Scheme – a result that would fundamentally undermine its purpose.”
If VAT was applied to the Motability Scheme, there are a range of ways in which it could be paid for. For example, the features of the Scheme could be changed to save money or up front Advance Payments could increase.
Based on the average price of a Scheme lease (for a petrol and diesel vehicle as of April 2025), costs to disabled people could range from £3,000 to £6,500. The enhanced mobility Personal Independence Payments (PIP) allowance is worth just over £4,000 a year.
The median household income of a disabled person using the Scheme is around £18,500 – about half the UK average (£36,700). This would immediately make the Scheme unaffordable for most disabled people, leaving only those on higher incomes able to participate.
Research also shows that a majority of disabled people using the Scheme will not replace the car purchase from an alternative route. A removal of the VAT zero-rating could therefore make it much harder for disabled people to access affordable mobility and any assumption that significant VAT revenue will be generated is misplaced.
The Scheme operates at scale, allowing bulk purchasing and strong manufacturer discounts. Removing the zero-rating would erode this efficiency and undermine the social purpose of enabling independence and affordable mobility. There would also be a knock-on impact to jobs in the automotive sector.
Contact information
Press Office
pressoffice@mo.co.uk
Media assetsFor those considering leaving the scheme, there are no changes to the HMRC scheme which allows full time wheelchair or stretcher users, who require “substantial and permanent adaptations”, to buy a new car with full VAT exemption off the purchase price (including optional extras), servicing and maintenance costs plus, of course, full exemption from road tax, including the luxury car supplement. There have been no restrictions added to exclude premium or luxury cars, so the Rolls Royce Cullinan is still included 😂
So were are being softened up little by little, so what next in the next spring further restrictions or budget AP cap, let see anything is on the books.
Unfortunately I have suffered a brain injury and occasionally I get confused and often say the wrong thing.
Well I never thought I’d see this from a labour government it’s almost perverse the way they’ve demonised the sick and the disabled they simply should be ashamed of themselves but I suspect Farage and his merry band of Tory failures would be worsen under bam pot.
the vat on AP will I suspect be a deal breaker for many of us they simply should hang their heads in shame as for the removal of so called luxury cars they simply should have been on the scheme full stop as it always have the daily mail caveman something to aim at,Motability should have read the post Covid room and took them off and once the hysteria settled down now they’re gone for good.
a sad sorry day for many of us
Perhaps Motability could increase the good condition bonus from say £250 to £500 as a way of helping absorb the AP on your next car?
You’d like to think they’re on our side in some small way after today’s budget…
How can they say the mileage will be reduced to whatever other leases are. You can have any mileage you want with a leased car. When taking out a lease you are asked what mileage you want. Many businesses lease cars with unlimited mileages. Salary sacrifice leases you have to state what mileage you want, the less miles the cheaper the lease. That part is nonsense.
How can they say the mileage will be reduced to whatever other leases are. You can have any mileage you want with a leased car. When taking out a lease you are asked what mileage you want. Many businesses lease cars with unlimited mileages. Salary sacrifice leases you have to state what mileage you want, the less miles the cheaper the lease. That part is nonsense.
What they are effectively saying is that 20,000 miles Pa is not in line with standard lease deals, most of which are defaulted to an annual mileage of between 8,000 and 12,000 miles. However, as you say, you can have a lease at whatever mileage you want. Therefore, my assumption is that Motability will change the default mileage on a lease to a lower figure (say 10,000 miles Pa) but people will be able to do higher mileage if they are prepared to pay more.
I’m always amazed at how low the mileages are on most Motability cars (which, IMO, makes them not terribly cost effective), so I suspect that this will only affect the minority of scheme users.
The reduction in miles I can’t really see as an issue 20k was an awful lot in my option but it’s the stuff not yet announced because now they’ve started they’re not going to stop are they?
for instance the insurance excess will doubtless go up in due course I suspect by the end of the decade the scheme will be unrecognisable
The reduction in miles I can’t really see as an issue 20k was an awful lot in my option
It might not affect you but (without going into our personal circumstances) we use the 20k allowance in full and any reduction will affect us massively. Together with the introduction of pay per mile for EVs, its a double whammy that we simply won’t be able to afford. Feeling robbed.
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