A builder’s guide to London’s Ultra Low Emission Zone (ULEZ) expansion

What is the Ultra Low Emission Zone (ULEZ)?

The ULEZ charge is a fee you have to pay if you want to drive a high-polluting vehicle in central London. The area it covers is due to expand across all London boroughs on 29August 2023. The ULEZ charge is currently a daily fee of £12.50.

Vehicles which meet the ULEZ requirements do not have to pay the charge. Whether your vehicle is exempt depends on its declared emissions, but the following vehicles all meet emission standards and are exempt:

Petrol cars and vans registered new from January 2006
Diesel cars and vans registered new from September 2015

Check if your vehicle complies on the TFL website.

Why is ULEZ expanding?

Research by Imperial College London found that in 2019 alone, air toxicity contributed to approximately 4,000 deaths in London, with the highest number in outer London boroughs like Croydon, Bromley and Barnet. The link between air pollution and illness is well known and it’s a contributory factor to many illnesses, including respiratory problems, cardiovascular diseases and lung cancer. In 2013, a nine-year-old girl from Lewisham sadly became the first person in the UK whose cause of death was listed as air pollution.

This is why London and other cities across the UK such as Bath, Birmingham and Aberdeen, are implementing and expanding low emission zones with the aim of reversing the effects of air pollution and reducing the growing pressure on local NHS surgeries and hospitals. The Mayor of London reports that the existing Ultra Low Emission Zone (ULEZ) is set to save the NHS around £5 billion over the next 30 years, and is confident that the expansion of the zone will deliver wider benefits for London.

Making sure your vehicle complies with ULEZ

On an average day, around 2.3 million vehicles pass through the streets of London, of which 200,000 are not compliant with ULEZ standards. In outer London, 8 out of 10 vans meet requirements.

If your business is registered either with Companies House or for VAT at an address within either the 32 London boroughs or the City of London, you may be eligible for the ULEZ scrappage scheme to help you cover the cost of replacing your vehicles. Some commercial vans can also be retrofitted to meet ULEZ standards, which involves modifying the engine and exhaust to reduce emissions. Check if your van can be retrofitted on the CVAS website.

The Mayor of London recently increased the budget for the scrappage scheme from £50 million to £160 million, and increased the number of vans that businesses and sole traders can claim for up to three.

From 21 August, micro businesses with up to 10 employees, small businesses with up to 50 employees, and sole traders can apply to scrap up to three vehicles (previously, the limit was one vehicle). The maximum scrappage grant available for each vehicle are up to:

£7,000 to scrap a non-compliant van
£9,500 to replace a non-compliant van with an electric van
£6,000 to retrofit a non-compliant van (this is typically enough to cover the cost)

Vans must be no heavier than 3.5 tonnes gross vehicle weight (GVW) and you need to be able to provide documentation including proof of DVLA registration, road tax, MOT and proof that it’s insured for business purposes. If you intend to replace the vehicle, the replacement must be the same body type and if it’s leased, it must be on a contract that lasts at least two years.

Larger vans, lorries and specialist vehicles over 3.5 GVW don’t have to pay the ULEZ charge, and instead pay the Low Emission Zone (LEZ) charge, which is not changing. However, it’s worth noting that some larger vehicles can be retrofitted to meet LEZ standards.

You can find out more about the scrappage application process for vans here.

Who can apply for the van scrappage scheme?

Sole traders who must own and operate a business within a London borough or the City of London
Micro businesses with:
- 10 or fewer employees
- Up to £632,000 turnover or up to £316,000 balance sheet total (in preceding and current financial year)
- Companies House registration or VAT registered within a London borough or City of London
Small businesses with:
- Under 50 employees
- Up to £10.2 million turnover or up to £5.1 million balance sheet total (in preceding and current financial year)
- Companies House registration or VAT registered within a London borough or City of London

Deadline for ULEZ scrappage grants

There’s no deadline by which you need to apply for the ULEZ scrappage or retrofit grants, however there is a finite funding pot for the scheme, which was increased from £110 million to £160 million in July amidst concern that the available funds would fall short. As there’s no guarantee this fund will be increased again, it’s wise to apply as soon as possible.

ULEZ grace period for small businesses

If you’re planning to upgrade your vehicles but won’t make it by the deadline of 29 August, you may be able to apply for a grace period.

You can apply for a short-term exemption from the ULEZ charge if you are a sole trader or small business with under 50 employees that’s registered within the 32 London boroughs and you have either ordered a newly manufactured light van, or booked a retrofit with an accredited fitter.

Your new vehicle order or retrofit booking must be made before 29 November 2023, but you can apply for the exemption at any point until 29 May 2024. Exemption kicks in from the point your application is approved, but note that it won’t apply retrospectively to any ULEZ charges you have already paid.

There’s no cap on the number of vehicles you can submit an application for, but you will need to apply separately for each one. Find out more and apply for the ULEZ grace period here.