EV Taxi tax exemptions and Government plug-in grant worth up to £7,500

London’s black cabs will get a new boost to go green with a tax exemption for electric taxis. This came in April 2018. The exemption, worth £1,550, applied to new cabs purchased from April onwards, and follows the Budget announcement that zero-emission taxis worth over £40,000 will no longer have to pay a Vehicle Excise Duty charge.

Currently, all cars over £40,000 are required to pay this charge. By exempting zero-emission taxis, it is hoped that you will want to replace your old diesel taxi for a cleaner, greener electric version.

The Fine Print

  • If just one driver switches to a zero-emission vehicle, it would help the country reduce levels of carbon dioxide by seven tonnes a year.
  • There are currently around 21,000 black cabs operating in London.
  • A zero-emission electric cab will also benefit from, on average, over £400 a month in fuel savings.
  • At Autumn Budget, the government announced a £400 million Charging Infrastructure Investment Fund to support the industry to roll out charge points for electric vehicles across the UK.
  • £1,550 tax exemption for electric taxis came into force this April.

Chancellor of the Exchequer, Philip Hammond said:

“We’re backing Britain’s black cab drivers to go green. This is a victory for the environment and new technologies, which I am determined to support as we build an economy fit for the future. Ensuring the air in our bustling towns and cities is free from pollution is part of our quest to become the first government to leave the environment in a better state”.

Traditionally, you have had a limited choice in what vehicle you can buy. This has meant that until now, you have been forced to pay charges which your competitors – (who can choose more affordable vehicles) – can avoid.

Not only will today’s exemption save drivers from paying the VED charge but by transferring to a zero-emission electric cab you will also benefit from, on average, over £400 a month in fuel savings.

This is part of a wider government plan to transform air quality in our towns and cities. It builds on the £7,500 Plug in Taxi Grant, which helps cab drivers buy a zero-emission vehicle.


  • You can get a discount on the price of brand new low-emission vehicles through a grant the government gives to vehicle dealerships and manufacturers. You do not need to do anything if you want to buy one of these vehicles – the dealer will include the value of the grant in the vehicle’s price.
  • Electric Taxis are included as Vehicles eligible for a grant. The amount of the grant depends on which category the vehicle is in. For Taxis (the maximum grant available for taxis is £7,500).
  • Not all low-emission vehicles will get a grant. Only vehicles that have been approved by the government are eligible for a grant, so what counts as a Taxi, for the grant?
  • Purpose-built taxis that have CO2 emissions of less than 50g/km and can travel at least 112km (70 miles) without any emissions at all. The only taxi currently approved by the government is: The LEVC TX Electric Taxi