Electric vehicles will have to pay to enter Greater London for the first time from the end of this year.
The air of change over London is slowly but surely sweeping across Britain and motorists need to understand and be ready to pay to drive on our busiest roads over coming years.
The capital’s Ultra Low Emissions Zone was the country’s first 24/ 7 Clean Air Zone started in April 2019 and initially related to roads in the central City of London Congestion Charging Zone brought in 16 years earlier to reduce traffic, noise and emissions.
In 2021 the ULEZ was extended to cover boroughs within the North and South Circular roads and two years later it was controversially expanded to include nearly all boroughs within the outer M25 with the exception of small pockets to the south and north-west and north-east.
Throughout its history, the zone’s charging structure has applied to all vehicles with some exceptions intended to encourage the use of electric and low emission petrol and diesel vehicles. On 2 January 2026, electric vehicles will also have to pay.
While ULEZ is unique to London, Clean Air Zones (CAZ) and Low emission zones (LEZ) exist in seven cities and more are in various planning stages including which vehicles will be covered, but expect those to be very tightly controlled with minimal exemptions included for residents as well.
By contrast to the sweeping area of London’s ULEZ, the CAZ and LEZ restrictions apply to a city centre, part of a city or just individual roads carrying heavy traffic volumes.
Over the last decade, the implementation of the zones has affected residents, commuters, visitors, logistics and businesses and a clear divide has emerged which suggests the less well off are impacted to a greater extent as they use cheaper and older vehicles which do not enjoy exemptions applied to younger and dearer vehicles.
It’s a point taken up by Lee Brown (above), Managing Director at Grosvenor Group, “ In terms of whether businesses are altering their leasing or buying patterns to reflect these growing zones, the reality is that because most company cars and vans are replaced on 3 to 4 year cycles, there will be very few company vehicles that are not compliant.
“This is because petrol cars registered after 2005 and diesel cars registered after 2015 are compliant, and there will be very minimal numbers of company vehicles older enough to ‘not’ qualify.”
He went on, “What is causing the shift toward ultra low and zero emission vehicles is the very attractive benefit in kind tax (BIK) on ULEVs and EVs and also company’s green policies.
“Because ULEZ, CAZ and LEZ will always be a moving feast, there is however no doubt that businesses operating in areas with ‘zones’ will be keeping a watchful eye over any prospective changes to the rules – for example the introduction of Zero Emission Zones.”
On the Transport for London website it states: In a Zero Emission Zone vehicles are subject to restrictions on exhaust emissions beyond those in the Ultra Low Emission Zone or Low Emission Zone.
The ZEZs can help improve local air quality while encouraging a switch to zero-emission vehicles, walking, cycling and public transport use. This will help to support the Mayor’s goal that by 2050 London will become a zero-carbon city.
Non compliant car drivers will face charges from £9 to £12.50 per day for driving in a CAZ/LEZ or the ULEZ. Commercial vehicle drivers pay more – for example, heavy goods vehicles (HGVs) may incur a daily charge of around £100.
For any driver looking to enter the ULEZ or a CAZ/LEZ there is always a website for that zone where they can check their vehicle’s compliance via a simple number plate entry, register and pay online either prior to entering or afterwards, but beware of strict time limits to do so. Five cities in Scotland are also included and can be found with other details at https://lowemissionzones.scot/
At the moment there are no zones in Wales or Northern Ireland, but this is expected to change.
The main ‘financial pain’ of this is borne by the general public that live in or near these zones and have older vehicles.
Lee added, “For businesses, most cars and vans will be compliant however in the unlikely event of an employee driving an older ‘company-provided’ vehicle it becomes a commercial decision as to whether the business activity is worth paying the fine.
“An area where it becomes interesting is for ‘grey fleet’ drivers – employees who use their own privately-owned cars for business use. Many grey fleet vehicles are older, and may therefore incur a charge, and when entering a ULEZ, LEZ or CAZ on company business the employee would be typically claiming that cost back from their employer.”
In that scenario, it is down to the employer to decide whether it is better to let the employee use their own vehicle, switch to public transport or incentivise them into a lower emission car. For example, via a salary sacrifice scheme employees can fund an electric vehicle at 40% less than a personal lease, which is an excellent way of encouraging drivers into EVs and out of their higher emissions cars.
Petrol cars meeting Euro4 standards comply with ULEZ and CAZ but diesel models must be Euro6. Electric vehicles are not subject to ULEZ charges. Hybrid vehicles may also be exempt, provided they meet Euro 4 emissions standards.
TfL is however proposing to begain discounted charges for EVs from 2 January 2026 and to annually increase the costs as it struggles with congestion and wants more to use public transport.
Some drivers are already planning for that and Michelle George (above), Commercial Director at CBVC, said, “Low Benefit in Kind rates make leasing EVs a cost effective option for companies looking to avoid on-going charges and stay compliant within the expanded zones.’
CBVC has also seen a rise in salary sacrifice scheme uptake, often driven by employees and she added, “Increasingly, businesses are coming to us for a salary sacrifice scheme because their employees are actively asking for it.
“Staff using their own older, non ULEZ compliant cars for work are now facing daily charges just to commute. For non company car drivers, salary sacrifice is the most cost-effective way to access an EV and avoid the charges.”
In Bristol, the EV salary sacrifice uptake doubled and the Clean Air Zone was a major driver in that. It’s not just employees who benefit from salary sacrifice, employers see reduced NIC payments, lower mileage reimbursement costs and a reduced carbon footprint.
What’s more, it’s not just the daily commuting cost which totals about £3,000 annually for a driver, but businesses face managing the charges and any penalties can also be very onerous for businesses from an administrative perspective.
Looking ahead to the introduction of zone charging for EVs, Transport for London’s (TfL) consultation on the Congestion Charge recognises the importance of commercial vehicles to the economy by creating a clear distinction between commercial vehicles and domestic road users.
However, Senior Policy Manager at Road Freight Regulation, Chris Yarsley said that the new proposals will still present a significant increase in costs for electric vehicle operators, who work in the capital without facing a charge.
He said, “It is vital TfL incentivise operators to decarbonise fleets and we continue to press for the continued exemption from the charge for electric vans and HGVs.
“Any increase in charges is a disincentive for operators to serve the capital and congestion charges should be used to encourage road users to use alternative modes of transport – an option that is not available to logistics operators.
“They simply cannot afford to soak up additional costs so it is likely that any increase in charges will have to be passed on which will ultimately lead to increased prices for the end user.
“London depends on logistics businesses to keep the capital stocked with everything its businesses and consumers rely on every day and the transition to alternatively fuelled vehicles should be incentivised, not penalised in this way.”
More than half of car dealers (53%) say the revised Zero Emissions Vehicle (ZEV) Mandate should create “breathing space” for new electric car sales. In April the Government said pure petrol and diesel cars would be banned from sale in 2030 but hybrid versions continue until 2035.
Startline’s June Used Car Tracker also shows that 41% believe the changes made show that the government has listened to the motor industry.
These included allowing hybrids to stay on sale until 2035, lower manufacturer fines for not meeting electric car production targets, and more flexible production credits.
Paul Burgess, CEO at Startline Motor Finance, said, “This amounts to a cautious welcome for the ZEV Mandate changes by dealers.
“They think the government has taken on board the concerns raised and taken actions that will at least buy some time. However, our research also indicates they have quite a long list of ongoing concerns about the electric car market.”
The Startline Used Car Tracker also reported that 45% of dealers believe the government will have to do more to support new electric car sales in the future and 35% that core problems stopping people electrifying – such as charging infrastructure – haven’t been addressed.
Also, 32% say the revisions don’t go far enough to have a big impact on new electric car sales and 32% that government support is also needed in the used electric car market.
Paul added, “It’s also interesting to see almost a third of dealers want to see the government take action to support electric car sales in the used as well as new markets.
“While the used electric car sector shows very real signs of stabilising, many retailers are wary, having had their fingers burnt by holding stock when values plummeted dramatically a year or two ago. Some also believe help is needed to make these vehicles more financially attractive to used buyers.”
