Chancellor Rachel Reeves could consider making major changes to the popular Motability scheme in the upcoming Autumn Budget, which could impact how disabled people access vehicles.
Reports suggest that the Chancellor is monitoring reforms to the Motability scheme to save around £1billion a year.
It comes as Rachel Reeves looks to plug a £50billion financial black hole, with the Labour MP already suggesting that tax rises could be introduced.
The Times has reported that the Chancellor could eliminate tax breaks, reducing an exemption where cars leased under the scheme do not need to pay VAT or Insurance Premium Tax (IPT).
Another potential change includes luxury manufacturers, like BMW and Mercedes, being removed from the Motability scheme.
The Chancellor is still considering potential tax cuts ahead of the Autumn Budget on Wednesday, November 26.
Government sources told The Times that reforms were focused on "fairness" rather than solely a cost-cutting measure, amid claims the scheme was being abused.
Reports have surfaced that claim to show "sickfluencers" taking advantage of Motability by leasing high-end vehicles through the scheme.
Chancellor Rachel Reeves could remove tax breaks for the Motability scheme in the Autumn Budget
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The sources added that the impact the decision could have on people with disabilities was still being assessed by the Government.
A HM Treasury spokesperson told GB News: "The Chancellor makes tax policy decisions at fiscal events. We do not comment on speculation around future changes to tax policy."
A statement from the Motability Foundation said: "The Motability Scheme provides a vital service to disabled people, helping them to overcome significant mobility barriers."
Conservative Leader Kemi Badenoch recently announced at the Tory Party Conference that she planned to make changes to the Motability Scheme if she won the next election.
Motability helps people with disabilities lease cars, with many now choosing electric vehicles | MOTABILITYLATEST DEVELOPMENTS:
Speaking in Manchester, she said: "We will restrict Motability vehicles to people with serious disabilities. Those cars are not for people with ADHD."
In response to the proposals to amend the terms of the Motability scheme, campaigners have called for the provisions to be protected to ensure disabled people are not disadvantaged.
Emma Vogelmann, co-chief executive of Transport for All, said a Motability car allows people with disabilities to avoid issues with public transport.
She said: "Scaling back the scheme would lock disabled people away from daily life. Does the Chancellor want to take away our freedom?"
It comes as Motability Operations announced this morning that it was guaranteeing that all of its electric vehicles would have 90 per cent battery life when selling back into the second-hand market.
The Motability scheme has announced a new EV battery health pledge
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A pilot scheme launched by Motability Operations found that 90 per cent of battery life improved confidence and consideration of the vehicles.
Motability has now made the battery health guarantee a permanent policy to ensure all users of its services have confidence in their vehicles when switching.
Andrew Miller, CEO at Motability Operations, said: "Battery reliability is one of the biggest sticking points for UK drivers. Our guarantee tackles this hesitancy head-on, giving both dealers and consumers the reassurance they need.
"It's a simple step that can make a real difference to the growth of the used market and support the UK's wider EV transition."