Social Justice Secretary Shirley-Anne Somerville has urged the UK Government to abandon possible VAT and insurance tax changes affecting the Motability vehicle leasing scheme, ahead of this month’s UK Budget.
In a letter to the Secretary of State for Work and Pensions Pat McFadden, Ms Somerville said the change could significantly increase vehicle costs for nearly 88,000 disabled people and carers in Scotland who rely on the scheme to meet their mobility needs.
Ms Somerville said the UK Government must not “balance the books” at the expense of disabled people at a time when household budgets are under significant pressure.
Read the full text of the letter below:
Rt Hon Pat McFadden MP
Secretary of State for Work and Pensions
Department for Work and Pensions
6 November 2025
Dear Pat,
I write following recent media coverage that the UK Government is considering removing the Value Added Tax (VAT) zero-rating and Insurance Premium Tax exemptions from vehicles provided to disabled people as part of the Motability scheme.
I am deeply concerned about the content of these proposals, and I am disappointed that we have not been consulted on these proposed changes for clients in Scotland. You will be aware that we have our own scheme in Scotland called the Accessible Vehicle and Equipment (AVE) Scheme.
Motability is currently the only active provider under the AVE Scheme and has 87,843 customers in Scotland many of whom are disabled people or carers. These proposals will cause significant fear and uncertainty for disabled people who rely on the Scheme to remain mobile and affordably lease a vehicle with no credit checks. Should the changes to the VAT arrangements be implemented by the UK Government, Motability has indicated that the advance payments for vehicles could increase significantly for disabled people at a time when household budgets are already under significant pressure. Whilst the AVE Scheme is devolved, the tax arrangements are not and it is concerning that that the Scottish Government has not been consulted.
I would welcome your urgent reassurance that HM Treasury will undertake a meaningful Equality Impact Assessment to assess the financial, wellbeing and health impact of any changes to disabled people, along with a commitment to publish that assessment. I would also welcome your reassurance that your officials will engage with Scottish Government counterparts on the potential impacts of any proposals.
I would strongly urge you to abandon these proposals and ensure that disabled people can access the support that meets their needs. If the UK Government does not, then disabled people can conclude, that the UK Government remains content to balance the books at their expense. The Scottish Government already uses its limited budget to invest around £1.4 billion mitigating the impact of 15 years of UK Government welfare policies, and this includes future mitigation of the two-child limit. However, it is not the responsibility — nor is it realistic — for the Scottish Government to mitigate all the UK Government’s most damaging policies.
A copy of this letter also goes to the Chief Secretary to the Treasury and Chancellor of the Exchequer.
