London’s vehicle scrappage scheme


Following on from the decision to expand London’s Ultra Low Emission Zone (ULEZ) London-wide in August this year, a new scrappage scheme worth £110 million has been launched. It will offer support to sole traders, SME businesses and charities to replace or retrofit their non-compliant vehicles

London’s Ultra Low Emission Zone (ULEZ) will be expanding across all London boroughs from 29 August 2023. To support businesses affected, a new scrappage scheme worth £110 million has been launched. It will offer support to charities, sole traders and SME businesses to replace or retrofit their non-compliant vehicles, as well support for lower income residents and disabled Londoners.
The scheme will also offer discounts on subscriptions, rentals and purchases of bicycles, e-bikes, cargo bikes, cars and vans from certain companies, such as Brompton, Enterprise and Santander Cycles.
Charities, sole traders and business with 10 or fewer employees registered in London can apply to scrap a van (£5,000 grant) or a minibus (£7,000 grant), retrofit certain vans or minibuses (£5,000 grant) or scrap and replace a van or minibus with a fully electric vehicle (£7,500 or £9,500 grant respectively).  

What’s changing?

The Ultra Low Emission Zone (ULEZ) is expanding across all London boroughs from 29 August 2023. If a vehicle does not meet the emissions standards, drivers could face a daily charge of £12.50.
The £10 annual fee to register a vehicle for Auto Pay – which let drivers who register their vehicles avoid the risk of forgetting to pay the daily ULEZ charge and incurring a penalty charge, has been scrapped. And the value of the ULEZ and Congestion Charge penalty charges have increased from £160 to £180, although they are reduced by 50 per cent if paid within 14 days.

Organisation eligibility

The Mayor of London’s scrappage scheme is designed to support eligible sole traders, micro businesses and charities to replace polluting vehicles that don’t meet the Ultra Low Emission Zone (ULEZ) emissions standards.
For micro businesses to be eligible, they need to have 10 or fewer employees, and show up to £632,000 turnover, or up to £316,000 balance sheet total in the preceding and current financial year. They must also have Companies House registration as an active company or VAT registered within the 32 London boroughs or City of London.
A sole trader is eligible if they are self-employed and own and operate a business within the 32 London boroughs or the City of London.
Charities must be registered with the Charities Commission as active within the 32 London boroughs or the City of London.

Vehicle eligibility

Vehicles eligible to be scrapped under the scheme include light vans, up to and including 3.5 tonnes gross vehicle weight, or a minibus that is up to and including 5 tonnes gross weight. They must be registered to an eligible organisation for more than 12 calendar months before the start of the scrappage scheme on 30 January 2023.
The vehicle must be registered with the Driver and Vehicle Licensing Agency (DVLA) in the name of the business, sole trader or charity. If the vehicle is registered to an employee, director of the micro business or trustee of a charity, the applicant will need to provide confirmation of their link to the organisation. The vehicle must also be insured for business use, certified with valid road tax and MOT, and ULEZ non-compliant (this includes pre-Euro 6 diesel vehicles and pre-Euro 4 petrol vehicles).
A replacement vehicle must be a fully electric light van, up to and including 3.5 tonnes, or a fully electric minibus, up to and including 5 tonnes gross weight.
The vehicle can be purchased or on a hire/lease contract that is at least two years long. The replacement vehicle must also be the same body type (van or minibus) as the vehicle that was scrapped.
For vehicles that are intended to be retrofitted, they must be on the Clean Vehicle Retrofit Accreditation Scheme (CVRAS) register. Applicants will need to find their vehicle’s make and model on this list to make sure it can be retrofitted. It must also be retrofitted by a CVRAS-approved company with an approved emissions reduction system.

ULEZ support offers

Several organisations are providing offers and promotions to support the scrappage scheme. They include other mobility options such as  hire and/or subscription services for bikes, cargo bikes, e-bikes and e-scooters. There are also discounts on car clubs with vehicles which meet the ULEZ emissions standard.
Commercial vehicle manufacturer IVECO has announced it will be contributing £1,000 to buyers of its eDAILY electric van, when purchased using London’s new scrappage scheme.
MAXUS meanwhile has launched its own scrappage programme, offering drivers the opportunity to switch to electric and save up to £14,000 on a new zero-emission MAXUS vehicle, plus a free home or workplace charger.

Disabled londoners

Londoners receiving certain means-tested benefits and non-means-tested disability benefits can apply for cash grants of up to £2,000 to scrap their non-compliant cars or motorcycles. As a new feature, successful applicants can choose to receive a higher value package comprised of up to two free annual bus and tram passes and a lower cash grant.
Disabled people who want to scrap or retrofit a non-compliant wheelchair accessible vehicle will be able to apply for grants of £5,000 to reflect the higher cost of these vehicles. Disabled people can also apply for a nominated driver who lives at a different address if they do not drive themselves.
There is also further support for disabled people, through new and extended grace periods, but they must be applied for.
The two new grace periods provide exemptions until October 2027 for recipients of certain disability benefits (or their nominated driver) and for all wheelchair accessible vehicles and some vehicles with other adaptations. The grace periods are available to all eligible people or a nominated driver regardless of whether they live in London, and they will apply to the current ULEZ zone as well.
The new disabled benefits grace period means that anyone who receives benefits that automatically make them eligible for a blue badge will also qualify for the new grace period.

Air quality in London

It’s well reported that poor air quality has numerous negative effects on people’s health. It is linked to illnesses such as cancer, asthma and lung disease, and there is a higher risk of dementia in older people. Air pollution even contributes to the premature death of thousands of Londoners every year.     
Numbers also suggest that the greatest number of deaths related to air pollution occur in outer London areas. That’s why the ULEZ is expanding across all London boroughs.
Already around 94 per cent of vehicles seen driving in inner and central London, and 85 per cent of vehicles seen driving in outer London meet ULEZ standards, meaning the vast majority of drivers will not need to pay.
The Mayor of London, Sadiq Khan said: “I took the difficult decision to expand the ULEZ because it will save lives, help tackle the climate crisis and reduce congestion. We have made huge progress in central and inner London but there is much more to do in outer London.
“Clean air is a fundamental human right – and everyone deserves to breathe clean air including those in outer London. Around 4,000 Londoners are dying prematurely each year due to toxic air, with the greatest number of deaths attributable to air pollution in London’s outer boroughs. It is causing people to develop life-changing illnesses, such as cancer, lung disease, dementia and asthma, and leading to children growing up with stunted lungs.
“We need to get the most highly polluting vehicles off our roads, which are damaging the health of all Londoners, including drivers. The rising cost of living has been a key consideration for me, which is why we are launching this new and improved scrappage scheme – the biggest ever – to help low-income and disabled Londoners, businesses, sole traders and charities switch to cleaner vehicles, or support them to make the most of other transport options.
“The health of Londoners must come first and I know that expanding the ULEZ London-wide, alongside this £110m scrappage scheme, will help us to continue building a greener, fairer and healthier London for everyone.

Find out more about the scrappage scheme here.