If a business trip takes you into the new London ULEZ and it is entirely for business reasons, then it is likely that any charges incurred by driving in a non-compliant car may be claimed in your tax return.
ULEZ – what is ULEZ?
ULEZ, an Ultra Low Emission Zone, has recently been expanded from Central London to cover Greater London inside the M25. The M25 is not in the ULEZ zone. It means that many vehicles travelling within this area will either need to meet the ULEZ requirements or pay a daily charge of £12.50. The new boundaries will mean the ULEZ scheme is in operation right up to where Greater London meets the home counties, including Essex and Hertfordshire.
If you are driving on any roads in the ULEZ you need to check if your vehicle meets ULEZ standards for emissions by entering the vehicle’s registration number into the Transport for London website.
If it is compliant, you do not pay a charge.
What if my vehicle is not compliant with ULEZ standards?
If your vehicle is not compliant with the ULEZ standards, then you need to pay a £12.50 daily charge.
However, if you are travelling into the ULEZ zone for business, or into any low emission zone in any other British city, you may be entitled to tax relief.
ULEZ tax relief – what you need to know
You will still need to pay the daily charge if your vehicle does not meet emission standards however, you may be entitled to tax relief in your tax return.
In a statement HMRC said: “Self Assessment customers are entitled to tax relief on travel expenses, including low emission zone charges, if they have been incurred wholly and 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 charges are also considered to be an allowable business expense.
Company cars and fleet vehicles
If your company has cars or vans for use by your employees, there are three options for paying for ULEZ daily charges, if applicable. The best option depends on the size of your fleet.
- If your business travel into the ULEZ zone is infrequent, you may wish to simply pay when required online on the TFL (Travel for London) website
- If your business has five or fewer vehicles, the quickest and easiest way is to register a payment card for Auto Pay.
- If your business has more than five vehicles in the fleet, you will need to register for Fleet Auto Pay. This will only allow you to pay by direct debit.
If you choose option 2 or 3, you will 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.
ULEZ daily charge exemptions
Be aware that there are a number of exemptions from the ULEZ charges in place until 2025 for community transport vehicles, and until 2027 for people receiving certain disability benefits and vehicles specifically for people with disabilities. There are also exemptions for NHS patients. See the TFL website for more details.
Call HB for help
If you want to discuss allowable business expenses or need support with your company tax return, do give us a call. Not only can we help with your questions, we can offer you support with your tax, management accounting and so much more. You can contact us on 01992 444466. We’re accountants for business and for people. We’re here to help.
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The information contained above is for general guidance purposes only. Whilst every effort has been made to ensure the contents are accurate, please note that each i
