"It is now understood to be considering removing tax breaks for the Motability scheme, under which disabled people are exempt from VAT and insurance premium tax on cars subsidised by the government. Whitehall sources said the ending of tax exemptions was under consideration but that no decision had been taken. They downplayed the idea of reducing the eligibility criteria for Motability cars, but said the option of scrapping the VAT and insurance premium tax exemptions was more likely."
"Another change under consideration is the idea of removing luxury brands such as BMW and Mercedes from the scheme, under which a minority of claimants top up with an advance to get a more premium car. These premium brands only make up 40,000, or about 5%, of the 800,000 Motability cars. Adding VAT and insurance premium tax to the Motability car's price tag would mean more claimants would need to make an advance payment for their cars."
Rachel Reeves said welfare cannot be left untouched this parliament and signalled the need for cuts and tax rises before next month's budget. The Treasury is understood to be considering removing tax breaks for the Motability scheme, which currently exempts disabled people from VAT and insurance premium tax on government‑subsidised cars. The government abandoned earlier cuts to disability benefits after a backbench revolt but will cut the health element of universal credit for future claimants from April 2026. Options include scrapping tax exemptions and removing luxury brands, which could force more advance payments and potentially raise around £1.2bn.
Read at www.theguardian.com
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