Motability changes face formal legal challenge

A proposed judicial review over changes to the Motability Scheme has formally entered the pre-action stage, with a Letter Before Claim served on HM Treasury over policy measures announced in the Autumn Budget 2025 and since translated into changes to scheme access and pricing.

According to the materials circulated to media, the claim argues that the Treasury acted unlawfully in the formulation and implementation of the policy, including by failing to comply with its duties under section 149 of the Equality Act 2010. The challenge also raises allegations of indirect discrimination, irrationality, and a failure to take relevant considerations into account. The claimant was not identified in the materials provided.

At the centre of the dispute are changes that will apply to new orders from 1 July 2026. Motability has already confirmed that new leases will come with an annual mileage allowance of 10,000 miles, down from previous levels, alongside an excess mileage charge of 25p per mile. The scheme has said the changes are a response to higher delivery costs after the Autumn Budget altered the tax treatment of qualifying vehicle leasing schemes.

The Treasury’s Budget documents set out that the government would limit tax breaks available to Motability and related schemes, with the wider package expected to raise more than £1 billion over five years. The policy includes removing VAT relief on top-up payments for more expensive vehicles on new leases from July 2026 and applying Insurance Premium Tax at the standard rate to scheme insurance contracts. For ministers, that is a revenue and tax-policy decision. For campaigners and affected users, it has become a question of mobility, independence, and equal access.

The pre-action letter contends that the impact falls disproportionately on disabled people whose travel needs are structurally higher, including those in rural areas, those attending frequent medical appointments, and those whose journeys are not discretionary. A separate request has also been lodged under the Freedom of Information Act 2000 seeking disclosure of documents connected to the decision-making process, including any Equality Impact Assessments and internal analysis.

The case therefore reaches beyond a narrow leasing dispute. It goes to how government weighs fiscal reform against statutory equality duties when a scheme is used to sustain access to work, healthcare, and everyday independence. Reactions to the Autumn Budget 2025 already showed how the statement pushed more policy risk into corners of the economy that had previously attracted less mainstream attention. Motability is now one of the clearest examples.

HM Treasury has been invited to provide a substantive response under the Pre-Action Protocol for Judicial Review. In the absence of what the claimant considers a satisfactory response, High Court proceedings are intended to follow.