Motability drops premium brands: will it actually save taxpayers money?
Fri, 28 Nov 2025
Britain's Motability scheme has dropped premium brands following media exposure and critique. Is it saving money, or saving face, as support for disability is placed under pressure?
Just a couple of days before the Chancellor's budget Motability announced that, with immediate effect, cars from premium brands would no longer be available through the scheme.
In addition to the the stated intent to offer a greater number of cars made in Britain it sounds like a pragmatic solution, saving cost for a cash-strapped government. But the government doesn't pay more for nicer cars.
The announcement follows a series of articles and news stories appearing across newspapers, social media and ultimately mainstream media websites, leveraging controversial figures such as Reform's Lee Anderson to resurrect the spectre of the classic 'Invacar' as a state-provided mobility solution.
The gist of the argument? The suggestion that PIP and DLA recipients qualifying for disability benefits are being given expensive, aspirational vehicles. And this is an unfair burden on the taxpayer.
As a result, users of the Motability scheme can no longer choose models from Audi, BMW, Mercedes-Benz, Alfa Romeo or Lexus.
On the 25th November, Motability published a press release announcing the change and addressing some potential concerns for users, as well as stating the intent that at least half of the range available by 2035 will be built in Britain.
Alongside the 'premium' vehicles removed from the selection, coupés and convertibles will no longer be offered. That amounts to the Mazda MX-5 and open-air versions of the MINI and Fiat 500.
Do taxpayers pay for luxury cars?
- Motability is a large lease fleet akin to a company car scheme or broker
- A monthly rental up to £300 per month regardless of vehicle
- Advance payments are paid by users, in-work benefit is not means tested
It's an attention-grabbing headline, the idea that someone on benefits could be 'given' a BMW X1 or Mercedes GLA. Like most headlines, it's not the full story. It's not even a faction of the story.
To start the ball rolling, taxpayers do not 'pay for cars'.
The relevant benefits are mobility-related disability support payments such as Disability Living Allowance (for claimants under 16), and the mobility allowance component of Personal Independence Payment (PIP) and similar schemes in Scotland.
In each case, the claimants' mobility needs must be severe enough to qualify or the higher or enhanced rate. Those awards are a fixed amount per week and they equate to around £300 per month, give or take a few percent.
Motability offers recipients of these mobility-related benefits the use of a suitable vehicle in exchange for all, or part, of the monthly allowance.
Prior to this announcement very few cars on the scheme could be described as 'free', as users make an advance payment if the maintained contract hire cost without a lump sum would be higher than the benefit. Out of 163 models offered, only 23 are available with no advance payment.
Regardless of what's available, options in that budget are among the smallest and least flexible vehicles on the market. 85% of users make an advance payment, but that doesn't mean they take a premium model.
They may need a car with more range than a Dacia Spring or Leapmotor T03, or more space than an Hyundai i10 or Toyota Aygo X. Even a Dacia Jogger (the cheapest base vehicle available for WAV conversion) needs an advance payment under the scheme.
The lease rates are largely, comparable to commercially available equivalents anyone could access. Supporting the charitable side of Motability has been achieved through VAT exemption, not higher payments to users with nicer cars. In June 2026 some of the exemptions for VAT and exemption from insurance premium tax will be revoked, increasing the cost of all cars on the scheme.
That is the lost revenue that has been described as a saving in the November 2025 budget. It amounts to roughly £200 million per year. That's assuming Motability customer habits remain the same.
If users choose cheaper vehicles and lower advance payment options, then the projected £1bn this move will raise over five years will not be achieved.
Why are premium cars offered - and being targeted?
- Luxury brands traditionally offer stronger residuals and lower lease costs
- Greater variety and personal choice for end users is part of independence
- Disability does not mean 'unemployed' - and users pay for their choice of vehicle
It is understandable that if people believe Motability cars are 'a handout', it would seem unfair to see people being given something that they can't have themselves. However, any taxpayer who finds themselves in need of support qualifies for the scheme as it is not means tested.
A key aspect of PIP is allowing people living with disability to continue to work and enjoy life, without having solutions dictated to them - over 54% of claimants are in work. It's a financial award and a car through Motability is just one of the options.
Motability Foundation, the charity, also provides grants for specialised adaptations. This saves the government and NHS significant, if infrequent, amounts and reduces the burden on specialists configuring and supporting users via the health service. Most people are empathic and understand Motability's support is a good thing for people with disabilities.
So, to sway public opinion and pressure a government move against the status quo, it wasn't enough to highlight users with an average car. To make an audience jealous, the report needed to target aspirational brands. Even when these models are often better value than cheaper cars when leasing from a broker.
Offering Audi, BMW, Mercedes-Benz and Lexus was not just a good thing for disabled drivers who are every bit as aspirational regardless of the challenges they face. These brands have strong resale values, a good thing for Motability's sustainability – and the cars join the used market after three years.
Alfa Romeo is a curious brand to include and a sad loss – disabled doesn't mean losing the sense of personality and individuality that the Italian marque embodies.
From July 2026 the VAT relief on advance payments will end alongside exemption from insurance premium tax – adding around £400 on average to the advance cost for Motability users, and potentially up to £3000 in lease cost to Motability Operations' bottom line. Fortunately, the exemptions remain in place for WAVs.
Will Motability cutting premium brands help the UK economy?
Motabilty's decision to axe premium marques is not a prudent financial move. It can be described as a noble, media-savvy reaction to an unjustified attack and highlights the balanced, skilful and rational governance of Motability as a charity.
Changes to tax exemptions for the charity are anticipated to net £1bn in revenue over five years, but as a consequence Motability is likely to reduce the mileage allowance on the vehicles and cut features such as European breakdown cover. If the list price of cars falls, so does the projected VAT component due when exemption ends.
The result is not cutting a welfare budget (in fact, disability payments increased with inflation). It's raiding a sustainable charity's liquidity, when that buffer would allow the service to ride out the significant changes in manufacturer and vehicle offerings as the market adjusts to net zero demands.
Meanwhile, the sort of private-public partnerships proposed as a replacement for the scheme result in high-cost mistakes with a real impact on the budget. Cancelled public transport projects continue to cost billions according to the National Audit Office.
