News & Features
The Budget's Impact on Disabled People
Posted in News on Thursday, November 27th, 2025
The 2025 Budget, presented by Rachel Reeves, brings major changes for disabled people who use the Motability Scheme and introduces welfare reforms that will also impact disabled people.
From July 2026, the Government will end key tax breaks on the Motability Scheme. Advance payments will no longer be exempt from VAT and will now carry the standard 20% tax. At the same time, the previous Insurance Premium Tax exemption for most leased vehicles will be removed, meaning many cars leased through the Scheme will now face a 12% insurance tax.
In tandem, as we highlighted earlier this week, the scheme will drop premium cars from the fleet. According to the Government, the move aims to align the scheme with its core purpose: providing essential mobility and practicality.
Disability Benefits Under Reform
Alongside changes to Motability, the Budget includes significant reforms to disability and welfare benefit assessments. The government plans to conduct an additional 122,000 Work Capability Assessments for existing claimants by 2029-30, a move described as necessary to ensure support reaches those who need it most. The government has also pledged to make a return to the face-to-face assessment process for Personal Independence Payment (PIP). We will be keeping an eye out for further changes that could be made to PIP soon as it is currently under review.
What These Changes Mean
For disabled people relying on the Motability Scheme, the coming changes will not be welcome. Higher upfront costs could make it harder for many to maintain independence.
We’re concerned that the pledge to return to face-to-face assessments for Personal Independence Payment, coupled with the fact that the benefit is currently under review, will lead to uncertainty for disabled people with regards to the stability of financial support.
Supporters of the Budget argue the changes are needed to ensure fairness, value for taxpayers, and long-term viability of welfare programmes. However, as the reforms roll out, the impact they have on individuals will have to be taken into consideration.
At DMUK we’re concerned that the original purpose of Motability and Personal Independence Payment (PIP) will get lost in these changes and the government will focus too heavily on cost saving measures at the detriment of disabled people. We’re keeping a keen eye on things as they unfold and we will keep you updated.
Further information about the changes to the Motability scheme can be found here - www.gov.uk/government/publications/vat-and-insurance-premium-tax-change-to-reliefs-for-qualifying-motor-vehicle-leasing-schemes/motability-scheme-reforming-tax-reliefs.
If you would like to view the Budget in full you can do so here www.gov.uk/government/publications/budget-2025-document/budget-2025-html.
Image credit: Kirsty O'Connor / Treasury - HM Treasury, OGL 3
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ChrisK
Thursday, November, 27th, 2025
So the hundreds of disabled folk sent to an early grave during Cameron’s government wasn’t enough so Labour have decided to have ago too to see if they can beat them.
Paul
Monday, December, 1st, 2025
The chancellor stated in the autumn 2025 budget that mentally ill persons will in future not be able to have a disability car from motability. She did not say when this will happen, or how she will do it. My son’s car in early June 2025 broke down and it was much too costly for us to pay for the repairs. In a phone conversation with a friend in May they said why hasn't your son applied for a mobility car from motability as you said earlier he has been granted the mobility section of PIP. So in may he with my help successfully received his motability car. He was allowed it due to his paranoid schizophrenia and other mental health problems. I his father had been unable to apply for one Myself even though I suffered a stroke and awkwardly collapsed over my knees damaging them so badly that I have to use a power chair to move about small distances and as I am retired I only receive Attendance Allowance which you don’t get mobility cars with, so I am totally dependant on any car my son has to get to appointments with doctors hospitals etc., and he is dependant on me when attending medical appointments to speak for him. Thankfully his driving skills are as good as when I taught him and still as when he passed his driving test first time. We are still unable to buy a cheap car with a deposit or payment plan. So are desperate to know when & what will happen. I look forward to your reply. Paul.