Is ULEZ An Allowable Expense?

Launched in April 2019, the London Ultra Low Emission Zone (ULEZ) aims to discourage anyone who drives an older, more polluting vehicle from using the roads in central London. The idea being that less pollution means cleaner air, with roadside nitrogen dioxide levels reducing in the capital by around 44%.

Since 25th October 2021, any vehicles travelling within the ULEZ must pay the daily charge if they don’t meet the emissions criteria. It operates 24 hours a day, 7 days a week, and includes the South Circular and North Circular roads.

Who must pay the ULEZ charge?

Only ‘cleaner’ vehicles will escape the ULEZ charge – and we don’t mean just give your car a wash! The ULEZ relates to the extent which your vehicle pollutes the air. If you’re not sure what the emissions rating of your vehicle is, you’ll usually find it on the V5 registration document. You can also enter your number plate into TFL’s online vehicle checker.

How much is the ULEZ charge?

If you do find your vehicle qualifies and you therefore need to pay, the charges are as follows:

Vehicle Type Minimum Emission Standard ULEZ Charge if Below Emission Standard
Motorbikes Euro 3* (all bikes registered since July 2007) £12.50
Cars and small vans Petrol Euro 4 (since Jan 2006)
Diesel Euro 6 (since Sept 2015)
Vans Petrol Euro 4 (since Jan 2007)
Diesel Euro 6 (since Sept 2016)
Lorries and coaches Euro VI (since Jan 2014) £100

Paying your ULEZ fees

Making payment for the ULEZ is straightforward and can be done online on the TFL website. It’s a similar process to paying the Congestion Charge and Dartford Crossing tolls.

In terms of the way the ULEZ charge is paid, this depends on the size of your fleet.

  • If your business has five or fewer vehicles, the quickest and easiest way is to register a payment card for Auto Pay.
  • However, if your business has more than five vehicles in the fleet, you’ll need to register for Fleet Auto Pay. This will only allow you to pay by direct debit.

Whichever option you decide on, you’ll need to pay a £10 per vehicle annual registration fee.

The plus side is that anyone driving a vehicle in your fleet can avoid any penalty charges, plus they can get a discount on the Congestion Charge too. See more about fleet auto pay.

Are there any other discounts or exemptions on the ULEZ?

Yes, there are some ULEZ discounts that drivers of certain vehicles can apply for. Some will be exempt entirely. Currently exemptions include:

  • Taxis
  • Vehicles for disabled people
  • Wheelchair-accessible private hire vehicles (PHVs)
  • Minibuses used for community transport
  • NHS patient reimbursement
  • Historic vehicles (those built prior to the 1st January 1973 will not be subject to the ULEZ charge, no matter what they’re being used for)

This list isn’t completely exhaustive and there are some other exceptions so it’s well worth checking out the TFL website for more information.

Can I claim ULEZ as an allowable expense?

As long as your ULEZ charge meets the criteria for claiming a ‘travel’ related expense, then yes, you can claim it against your business profits in order to reduce your tax bill.

This means that incurring the charge must not be as part of your usual commute to your normal workplace, and must relate wholly and exclusively to the business.

Stuck paying the ULEZ? There’s a couple of ways to upgrade

There are two common ways of upgrading your fleet to cut the ULEZ charges your business must pay.

Retrofit your existing fleet

The ULEZ does allow for vehicles to be retrofitted with technology that will reduce emissions. However, the technology must be verified by the Clean Vehicle Retrofit Accreditation Scheme (CVRAS) – which currently only certifies technology used by buses, coaches and refuse vehicles. This is great if your business primarily uses these types of vehicles, but not so great for cars and vans.

Going electric

The government (and TfL) are strongly encouraging fleets to go all-electric. As electric vehicles produce no emissions at all, there’s no ULEZ charge to pay.

Are there any penalties if I don’t pay the ULEZ charge?

Yes, unfortunately there’s no sneaking under the radar with this one. TfL uses automatic number plate recognition cameras to see which vehicles are entering and leaving the ULEZ zone.

If you don’t pay the charge, a hefty penalty charge notice will apply of £160. This is reduced to £80 if you pay within 14 days.

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