Motability: Insurance Premium Tax
The question
To ask the Secretary of State for Work and Pensions, what assessment he has made of the potential impact of applying Insurance Premium Tax to certain vehicles under the Motability Scheme from 1 July 2026 to levels of (a) poverty and (b) financial hardship among people with disabilities.
Answered by Sir Stephen Timms
The package of reforms to the Motability Scheme announced as part of the Budget will ensure the Scheme delivers fairness for the taxpayer, while continuing to support disabled people. The Scheme will continue to offer a choice of affordable vehicles to meet a range of accessibility needs and offer vehicles which require no advance payment, meaning that people will be able to access a suitable vehicle using only their qualifying disability benefit. Insurance Premium Tax (IPT) will apply to leases at the standard rate, bringing tax treatment in line with commercial leasing firms.
Existing leases and vehicles substantially designed for, or adapted for, wheelchair or stretcher users will continue to benefit from VAT reliefs on advance payments and the IPT exemption, in recognition of the additional costs associated with these vehicles.
Motability Foundation, the independent charity with responsibility for overseeing the Scheme, will continue to offer means-tested grants to support eligible people who would otherwise struggle to afford the advance payment.
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