ULEZ Scrappage Scheme and Retrofitting: What small businesses and sole traders need to know

Local News 7 Sep 2023

If you’re a London-based small business owner looking to scrap or retrofit a vehicle that’s not ULEZ compliant, find out how you could claim a grant payment via the ULEZ Scrappage Scheme for cars, vans and other commercial vehicles.

Ultra Low Emission Zone sign in street

London’s Ultra-Low Emission Zone (ULEZ) was expanded to all London boroughs on 29 August 2023. If you’re a small business owner or self-employed and making a trip inside the zone using a vehicle that doesn’t meet the ULEZ emissions standards, you’ll now need to pay a daily charge. 

Small business owners and sole traders have until 29 November 2023 to apply for the Transport for London (TfL) £160 million ULEZ Scrappage Scheme, to help your vehicle to comply with ULEZ emissions standards. This could either be by scrapping and replacing your vehicle, or retrofitting your existing vehicle so it meets the standards.

In this article, you’ll find all the details you need about eligibility criteria and the application process for scrappage funding.  

What is the Scrappage Scheme? 

The Scrappage Scheme provides grant payments to successful applicants to replace or retrofit vehicles that don’t meet the ULEZ emissions standards. Any London resident living in one of the 32 London boroughs or the City of London with an eligible vehicle can apply to scrap a car or motorcycle. 

Grant payments are also available to small businesses (under 50 employees), micro businesses (up to 10 employees), sole traders and charities with a registered address in London.  

How to check if your vehicle is ULEZ compliant 

ULEZ compliance is based on declared emissions. Generally, this means non-compliant vehicles are: 

  • Pre-Euro 4 petrol vehicles first registered with the DVLA after 2005 (although cars that meet the standards have been available since 2001) 
  • Pre-Euro 6 diesel vehicles registered as new after September 2015 

Use this tool on the Transport for London website to check if your vehicle meets ULEZ emissions standards. 

What’s the difference between scrapping and retrofitting a vehicle?

Once you’ve checked that your vehicle is non-compliant and you’re ready to apply for the scheme, you’ll have two options: scrapping or retrofitting.

Scrapping involves disposing of the old vehicle and using the grant money towards replacing it with a vehicle that meets the emissions standards.

With retrofitting, the grant money is instead used to upgrade your existing vehicle with emission reduction technologies in order to make it compliant. Any improvement made must be approved by the Clean Vehicle Retrofit Accreditation Scheme (CVRAS).

You should look at the costs involved for each option based on the vehicles you have to decide which option will be best for your business.

How to apply for the ULEZ Scrappage Scheme  

There are two different schemes depending on your vehicle type. Each vehicle will need a separate application.  

ULEZ Car and Motorcycle Scrappage Scheme 

  • For London residents with cars, motorcycles and wheelchair accessible vehicles that don’t meet ULEZ emissions standards 
  • Various grant payment options between £200 - £10,000 depending on vehicle 
  • Cars, motorcycles (including mopeds, motorised tricycles and quadricycles) or wheelchair accessible vehicles (cars and vans) 
  • The vehicle needs to have been registered with the DVLA since 30 January 2022 or before 
  • It must also have valid insurance, road tax, and MOT 

Find out more about this scheme. 

ULEZ Van and Minibus Scrappage Scheme 

A grant payment for sole traders, micro businesses, small businesses or charities with a registered address in London, to scrap or retrofit up to 3 vans or minibuses that don’t meet the ULEZ emissions standards. 

  • £7,000 to scrap a van 
  • £9,000 to scrap a minibus 
  • £6,000 to retrofit a van or minibus 
  • £9,500 to scrap a van and replace with an electric van 
  • £11,500 to scrap and replace a minibus with an electric minibus 

The vehicle must be: 

  • A light van up to and including 3.5 tonnes gross vehicle weight (GVW) or minibus (up to and including 5 tonnes GVW)  
  • Registered with the Driver and Vehicle Licensing Agency (DVLA) in the name of the business, sole trader or charity (if the vehicle is registered to an employee, director of the small/micro business or trustee of a charity you will need to provide confirmation of their link to the organisation) 
  • Insured for business use 

Find out more about this scheme.  

Proving your eligibility as a small business owner or sole trader 

You’ll be asked to upload evidence to prove your eligibility as part of your application. 

Small or micro business owners 

  • Your Companies House number 
  • Photo ID of the director of the company showing their name (driving licence or passport) 
  • Utility bill or bank statement (dated within the last three months) in your business' name showing the operational address 

Sole traders 

Photo ID showing your name (such as a driving licence or passport) plus one of the below documents evidencing you’re a sole trader (including your operating address):  

  • Active business insurance or employers' liability insurance (active at point of application) 
  • Proof of self-employment from HMRC 
  • Federation of Small Businesses membership certificate (if you're an FSB member, you can access this via your membership dashboard) or similar reputable trade or professional body
  • Proof of a business bank account 
  • Tax return (dated within the last 12 months) 
  • Letter from accountant or solicitor confirming sole trader status (dated within the last three months) 

Can you apply for the Scrappage Scheme if you’ve applied previously? 

Small businesses, micro businesses, sole traders and charities who have already received a grant payment for one vehicle under the scheme may reapply to scrap or retrofit an additional 2 vehicles. Charities may apply to scrap or retrofit up to 3 vehicles even if you received a grant payment under the previous scheme.   

Business and charity short-term grace period  

If you’ve ordered a new van or minibus, or your non-compliant vehicle is being retrofitted, you may be eligible for the grace period. This means that you will be exempt from the daily charge. 

To qualify for the grace period, you have until 29 November 2023 to order a new ULEZ-compliant vehicle or book a retrofit with a CVRAS fitter. The duration of this grace period will be of a maximum of six months (or up to 29 May 2024, whichever is sooner) for both new vehicles and retrofit bookings.  

To apply for this, you will need: 

  • Photo ID of the applicant, showing their full name 
  • The ULEZ non-compliant vehicle's V5C (the front and second page) 
  • Current motor insurance for the non-compliant vehicle for business use 
  • Businesses will need to provide their Companies House or VAT registration number 
  • Charities will need to provide their Charity Commission number 
  • Sole traders will need to provide proof of Sole Trader status 

Find out details about the full terms of eligibility and application for the grace period on the TfL website.  

What other support is available for small businesses? 

The Federation of Small Businesses confirmed with HMRC that self-assessment customers are entitled to tax relief on travel expenses, including low emission charges such as the ULEZ charge, if they have been incurred wholly and exclusively for the purposes of the trade. Employees would also be entitled to tax relief on the charges if they drove as part of their work, although this does not include commuting. 

What has FSB lobbying achieved?

At FSB, we've provided survey data, policy papers and member case studies to the Mayor’s office. As a result of FSB lobbying, we have secured:

  • An initial Scrappage Scheme of £110m – which was increased to £160million.
  • The Scrappage and Retrofit Scheme for micro businesses and the self-employed was then extended to all small businesses as of August 2023.
  • A grace period for small businesses and registered charities who placed an order for a CVRAS-approved Euro 6 retrofit up to May 2024. 
  • The grants for retrofit of certain Euro 5 vans to Euro 6 level were increased from £5,000 to £6,000. FSB has heard estimates that it will cost around £8,500 overall to retrofit these vehicles. So that grant will cover around 70% of the overall cost.

Join the Federation of Small Businesses

Running your own business is rewarding, but you don’t have to face the challenges alone. As an FSB member, you’ll have all the support and expertise you need to start, run and grow your business.

Find out more