In a significant move affecting disabled drivers, the Department for Work and Pensions (DWP) is set to remove a series of perks for recipients of Personal Independence Payment (PIP).
Chancellor Rachel Reeves is pressing ahead with plans to scrap approximately £300 million in tax breaks for the Motability scheme, with changes coming into effect from Wednesday, 26 November 2025.
What Changes Are Being Made to the Motability Scheme?
The Motability scheme, which allows disabled people, primarily PIP claimants, to lease a car using their mobility allowance, is facing a major restructuring. Chancellor Reeves is expected to confirm the changes in the Autumn Budget.
The key financial adjustments include the imposition of an insurance premium tax on leases, which will increase the cost of leasing a car for users. Furthermore, VAT will be applied to advance payments for higher-value vehicles.
Alongside these financial changes, 25 luxury car models will be removed from the list of vehicles eligible for the scheme. Premium brands such as BMW, Mercedes, and Audi are among those being cut.
Impact on Disabled People and the UK Economy
Andrew Miller, Chief Executive of Motability Operations, emphasised the scheme's importance, stating: "The Motability Scheme makes a difference to disabled people’s lives every day and our customers tell us it is a lifeline to freedom and independence."
The scheme has significant economic and social benefits. On average, users are able to work an additional two days per week. For every £1 of disabled people’s allowances spent on the scheme, it generates £1.50 of benefit for the UK economy, supporting an estimated 34,000 jobs across the country.
Chancellor Reeves defended the changes, linking them to a broader industrial strategy: "Backing British car manufacturing will support thousands of well paid, skilled jobs and is exactly the long-term investment our Modern Industrial Strategy delivers."
Full List of Cars Leaving the Motability Scheme
The following 25 models will no longer be available through the scheme:
- Alfa Romeo Junior
- Alfa Romeo Tonale
- Audi Q2
- Audi A1 Sportback
- Audi A3 Sportback
- Audi A3 Saloon
- Audi Q3
- Audi Q4 E-Tron
- Audi Q4 Sportback E-tron
- BMW 1 Series
- BMW 2 Series Gran Coupe
- BMW X1
- BMW X2
- BMW i4
- BMW 2 Series Active Tourer
- BMW iX1
- BMW iX2
- Lexus LBX
- Lexus RZ
- Lexus UX
- Mercedes-Benz CLA Shooting Brake
- Mercedes-Benz GLA
- Mercedes-Benz CLA Coupe
- Mercedes-Benz EQA
- Mercedes-Benz GLB
This overhaul marks one of the most substantial changes to the Motability scheme in recent years, directly impacting the choices available to disabled individuals relying on this vital service.
