ULEZ: Self-employed drivers can claim tax relief on clean-air charges in London

Self-employed drivers are entitled to claim tax relief on London’s Ultra Low Emission Zone (ULEZ) charges.

The ULEZ was today expanded from the area within the North and South Circular roads to almost the whole of Greater London.

Most drivers of non-compliant vehicles in the capital will now have to pay a £12.50 daily charge.

According to HMRC (His Majesty's Revenue and Customs), self-assessment customers - those who are self-employed - are entitled to tax relief on travel expenses “including low emission zone charges”.

This is because they are classed as an allowable expense, and so can be deducted fully from their taxable profits.

They can only be claimed if the charges are incurred “wholly and exclusively for the purposes of the trade”, discounting non-business driving or travel costs, fines, or a commute between home and work.

A Transport for London (TfL) spokesperson said: “Rules around tax deductible expenses will apply in the usual way to ULEZ charges.

“This is a matter for HMRC but it is likely to depend upon the nature of the operation and circumstances around incurring the charge as to whether it is tax deductible, as is the case for other expenses.”

A HMRC spokesperson did not refer to the ULEZ expansion specifically, but 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.”

Prior to the extension of the clean-air zone, Mr Khan said: “This Tuesday will be a landmark day for our city as the Ultra Low Emission Zone expands to ensure every Londoner breathes cleaner air.

“We’ve already seen huge progress since I announced the expansion. On the eve of the roll out 9 in 10 cars seen driving in the zone on an average day are already compliant and won’t pay a penny. Financial help is available for every single Londoner and small business whose vehicle is not compliant.

“It was a very tough decision to expand the zone, but with toxic air leading to around 4,000 premature deaths each year and our children growing up with stunted lungs, it is the right thing to do.”