Premium brands including BMW, Mercedes-Benz, and Audi have been removed from the scheme with VAT changes scheduled for July 2026
Concerns have been raised about a potential ‘reduction in choice’ for wheelchair users following the decision to decrease the number of vehicles available through the Motability scheme.
Last month, the government decided to remove premium brands such as BMW, Mercedes-Benz, Audi, Lexus, and Alfa Romeo from the scheme, along with all coupes and convertibles, aiming to focus the scheme on essential, practical cars.
Adding to these worries, the Department for Work and Pensions has confirmed that VAT will be applied to Advance Payments from July 2026, and Insurance Premium Tax will also be imposed on Scheme leases due to last month’s Budget changes.
The Motability company, which operates the large scheme accounting for one in five car sales in the UK, estimates that the typical Advance Payment, or initial cost, for a vehicle will increase by around £400 over the three-year package.
Labour’s Neil Duncan-Jordan, in a new challenge, questioned the impact of this significant limitation on the range of cars available on wheelchair users, according to the Liverpool Echo, reports the Mirror.
He asked Secretary of State for Work and Pensions Pat McFadden: “Whether Motability’s removal of luxury vehicles will result in a reduction of choice for wheelchair accessible users.”
Sir Stephen Timms, Minister of State for the Department for Work and Pensions, has provided reassurance that the tax alterations will not substantially impact vehicles “substantially adapted for wheelchair users”.
He also highlighted that means-tested grants remain accessible: “The Motability Scheme is a lifeline for many disabled people and families, supporting their independence by enabling them to lease a car, wheelchair accessible vehicle, scooter or powered wheelchair in exchange for an eligible disability benefit allowance.
“We are protecting the taxpayer through changes to the Motability scheme, ensuring it supports disabled people whilst delivering efficient use of taxpayers’ money. This includes the removal of some luxury vehicles from the leasing scheme while maintaining a range of vehicles to support disabled people.
“Tax changes will not impact vehicles substantially adapted for wheelchair users, or existing leases, and Motability will continue to provide vehicles at no additional cost to the value of eligible disability benefits, ensuring that people can access vehicles suited to their needs, whether that’s a larger vehicle or extra boot space to carry wheelchairs.
“For customers who cannot afford essential costs or need more complex adaptations, the Motability Foundation will continue to provide means-tested grants to those most in need of financial help. In 2024/25, these grants totalled £59.3 million, supporting over 10,000 customers.”
To qualify for a Motability vehicle, individuals must receive a higher-rate mobility allowance, which includes the Enhanced PIP Mobility Component, Higher Rate DLA Mobility, Armed Forces Independence Payment (AFIP), or War Pensioners’ Mobility Supplement (WPMS), and they must have at least 12 months remaining on their award.
The Government has suggested it may consider prioritising British-manufactured brands within the Motability scheme, which accounts for one in five new car sales across the UK.
Labour’s Jim McMahon asked: “Whether the government has held discussions with Motability following the revision of vehicle brands supported by the scheme to prioritise British-made vehicles and to report accurate data on the number of British and non-British-made vehicles procured.”
In response, Sir Stephen said: “Motability Operations, an independent commercial company which delivers the Motability Scheme, has announced plans to support the government’s Modern Industrial Strategy. The number of British-made vehicles purchased by the scheme will reach 25% by 2030, with an ambition of 50% of vehicles registered on the Scheme being made in the UK by 2035.
“The Department for Work and Pensions will continue to meet regularly with Motability Foundation, the independent charity with responsibility for overseeing the Scheme, to discuss the Schemes operation.”
