Budget Cuts Threaten Car Benefits for Motability Drivers
Recent discussions indicate that budget cuts may impact car benefits for Motability drivers. This scheme allows eligible individuals to exchange personal independence payments (PIP) or disability living allowance (DLA) for a vehicle.
Motability Scheme Overview
Under the scheme, participants can access benefits covering car insurance, breakdown cover, servicing, and vehicle excise duty (VED). The maximum value for vehicles is £35,000, with any amount above this requiring an advance payment.
Current Vehicle Options
- Approximately 900 car models are available, with some exceeding £50,000.
- Luxury brands like BMW and Mercedes are currently accessible to over 40,000 drivers.
- A BMW i4 electric car can be leased for a £7,999 advance payment plus the full PIP allowance, valued at £52,870.
- A Mercedes-Benz GLA is available with a three-year lease for an advance payment of £3,999.
Recent Trends in Motability Sign-ups
In 2024, approximately 170,000 new drivers enrolled in the Motability scheme, alongside 220,000 lease renewals. This indicates that around 390,000 cars were provided under the initiative, all being new vehicles.
Tax Exemptions and Controversies
Motability car drivers benefit from exemption from insurance premium tax (IPT), which normally includes a 12% charge. Critics argue that it is essential to maintain support for individuals who genuinely need assistance with mobility. However, some voices have expressed concern over the scheme being exploited for high-end car purchases.
- Kemi Badenoch, Conservative Party leader, suggested restricting the scheme to those with serious disabilities.
- Elliot Keck from the TaxPayers’ Alliance raised issues regarding the intentions of the Motability scheme.
Management Compensation Concerns
Recently released company documents revealed significant pay packages for the Motability Operations executives. Andrew Miller, the CEO, earned £748,000 in 2024, while CFO Matthew Hamilton-James received £691,000.
Government Response
The Treasury has refrained from commenting on speculation surrounding any alterations to the Motability scheme. Meanwhile, a representative from the Motability Foundation emphasized the importance of the service in assisting those facing mobility challenges.
