Sole traders and the self-employed will be able to claim tax relief on London’s new green charges when they submit annual tax returns for business-related journeys.
The new Ultra Low Emission Zone (ULEZ) charge was extended to all London boroughs on 29 August this year. Older cars now have to pay a £12.50 daily fee to enter the area, or face a £180 charge for failure to pay.
However, ULEZ charges will be tax deductible if incurred for business purposes. HMRC said:
“Self-assessment customers are entitled to tax relief on travel expenses, including low emission zone charges, if they have been exclusively for the purposes of the trade.
“When a self-employed individual claims an allowable expense, the amount is deducted fully from their taxable profits.”
ULEZ applies to petrol vehicles first registered before 2006 and diesels registered from 2015.
There is also a £160 million scrappage scheme for drivers with affected vehicles. It’s open to sole traders, charities and small businesses with fewer than 50 employees, but must be claimed by 29 November 2023.
The grant for scrapping a non-compliant van is £7,000, while there is a £9,000 subsidy for purchases of electric vans.
We can help
If you would like more information, or you would like to discuss your own circumstances, please get in touch.