Motability customer launches legal action against Treasury over tax measures that put ‘lifeline’ at risk

A Motability customer has launched a legal action against the Treasury over budget measures that he says will put at risk the mobility “lifeline” the scheme provides to disabled people.

Charlie Proctor, from Dorset, sent a legal letter to the Treasury last week, arguing that the tax measures announced last November by chancellor Rachel Reeves were unlawful and will particularly risk excluding disabled people who use their vehicles the most.

He says that subsequent changes introduced by Motability Operations because of the tax measures will make the scheme unaffordable for many disabled people.

Reeves has imposed VAT at 20 per cent on most advance payments for cars leased through the scheme and removed the current 12 per cent insurance premium tax exemption.

Only vehicles with substantial adaptations for wheelchair- and stretcher-users will be exempt from the new taxes, which will be imposed on new leases from July.

The taxes are expected to bring in £355 million a year by 2030-31, while Motability Operations has said the tax changes will add about £300 million a year to the cost of running the scheme by the end of the decade.

The changes Motability has introduced to the scheme include sharp cuts to the annual mileage allowance and increased excess mileage rates for new orders placed after 1 July.

It is halving the mileage allowance for most customers from 20,000 miles a year to 10,000 miles and increasing the excess mileage charge for anything above this from 5p per mile to 25p (or 21p for those who do not pay VAT on additional payments, such as those with a wheelchair-accessible vehicle).

Motability Operations has said that, without these changes, the tax changes would have added around £1,100 to each lease, while its measures are designed to reduce this to around £400 on average over three years.

Proctor has called on the Treasury to reconsider its policy, produce a “lawful and adequate equality assessment”, and take steps to avoid excluding disabled people who need higher mileage from the Motability scheme.

Proctor, who will seek a high court judicial review of the tax changes if the Treasury fails to resolve his concerns, has gathered evidence from Motability customers across the UK, including those in rural areas and Northern Ireland.

He says this evidence shows “a clear pattern of impact which appears not to have been properly considered” by the Treasury when drawing up the policy.

He has launched a crowdfunding bid to meet his legal costs.

He says on his crowdfunder page: “You cannot design a system for disabled people that excludes the people who need it most.

“This is a fight not just for me, but for thousands of people who are about to be pushed out of a system that was supposed to support them.”

He told Disability News Service that the material he has gathered so far “indicates a consistent pattern of impact affecting individuals who rely on higher levels of mobility for essential purposes” and are likely to be “disproportionately affected by the changes”.

Proctor argues in his “pre-action protocol letter before claim” that the budget measures led to Motability reducing its mileage allowance, increasing excess mileage charges, and expanding its new Drive Smart system, which monitors the driving behaviour of many customers who take on new leases (see separate stories).

He says these measures were “a direct and foreseeable consequence” of the chancellor’s tax decisions, and that both he and other Motability customers will be affected.

Proctor says in the letter that the Motability changes will impose “substantial and unavoidable financial burdens” that will make the scheme no longer affordable for those needing “significantly higher mileage than average” from their vehicle because of disability-related needs.

This includes those who require regular medical treatment, carers, those who use their vehicle to transport disabled children, and disabled people who live in rural or isolated locations.

Proctor says these impacts will be compounded by the rollout of Motability’s Drive Smart monitoring system, which may not reflect “the realities of disability-related travel”.

He says in his letter: “There is a real risk that such systems will penalise or restrict users whose driving patterns arise directly from disability-related needs, thereby reinforcing the exclusionary effect of the policy.”

He claims the Treasury breached its public sector equality duty under the Equality Act, including by its failure to take “reasonable steps to inform itself of the impact of its decision on disabled persons requiring higher-than-average mileage”.

And he claims the Treasury is guilty of indirect discrimination because its measures have placed disabled people who need higher mileage from their vehicles at a particular disadvantage.

He also claims the government has been irrational because its policy “undermines the purpose of the scheme by disproportionately affecting those most dependent upon it”, and that it failed to take “relevant considerations” into account when drawing up the policy, including the essential nature of the travel of disabled people who need higher mileage from the Motability scheme.

The Treasury said it had received Proctor’s letter but would not comment on potential litigation.

Proctor is also using the Freedom of Information Act to seek key documents from the Treasury, including any equality impact assessments, internal analysis, and briefing materials relating to the policy changes affecting the Motability scheme.

A spokesperson for Motability Operations, the company that runs the Motability scheme, which is named as an interested party in Proctor’s legal letter, said: “We are aware of the correspondence.

“Decisions on tax policy are a matter for government, and it would not be appropriate to comment on ongoing legal matters.

“Our role is to deliver the Motability scheme, which provides disabled people with good value, reliable transport to support their independence and help them get to work, education and medical appointments.”

*Motability Foundation, the charity that oversees the Motability scheme, is a Disability News Service subscriber

Picture: Rachel Reeves (left) and Charlie Proctor