TfL writes to Treasury asking for extended taxi grants and dropping VAT on wheelchair accessible taxis

Sadiq Khan circle image credit: Greater London Authority

Transport for London (TfL) has written to The Treasury asking for additional help to reduce escalating vehicle costs facing cabbies in the capital.

Susan Hall, a London Assembly Member and Conservative Mayoral Candidate, raised concerns to the Mayor of London about the escalating costs of taxis potentially driving drivers out of the industry. The focus of Hall's written question was on the affordability of the Zero Emission Capable (ZEC) vehicles and their future viability as taxis in London.

Sadiq Khan, the Mayor of London, acknowledged the substantial investment required by taxi drivers in acquiring new ZEC vehicles, purchasing second-hand taxis, or renting them. He emphasised the efforts of Transport for London (TfL) and his administration in supporting taxi vehicle owners in transitioning to ZEC vehicles.

The Mayor highlighted TfL's proactive approach, including a recent request to the Treasury for additional support measures for taxi vehicle owners. These measures include the extension of the Plug-in Taxi Grant (PiTG) beyond March 2023, VAT relief on taxi purchases as designated wheelchair accessible vehicles (WAVs), and a reduction in VAT for on-street vehicle charging for taxi and private hire vehicle (PHV) drivers, to bring it in line with home charging rates.

Despite these efforts, the cost of taxis remains a pressing issue. The LEVC TX taxi, produced by the London Electric Vehicle Company (LEVC), was priced at £74,359 in October 2023. With the PiTG, the price reduces to £66,859, but the grant is scheduled to expire in Spring 2024. Most taxi drivers find these cash prices unaffordable, and the cost of the vehicle, including finance, amounts to £91,327.40, further exacerbating the issue.

Khan noted that the pricing of the vehicle is a commercial matter for LEVC. However, the high costs have raised concerns about the long-term sustainability of the taxi industry in London, particularly given the city's push towards greener transportation options.

The situation underscores a significant challenge within the taxi industry: balancing the need for environmentally friendly transportation with the economic realities faced by taxi drivers.

Sadiq Khan, Mayor of London, said: “I recognise the significant investment required by taxi drivers, whether they are purchasing a new ZEC vehicle, buying a second-hand taxi or renting one.

“I have set out the support Transport for London (TfL) and I have provided to taxi vehicle owners to help them transition across to ZEC vehicles.

“TfL has recently written to the Treasury asking them for additional support measures for taxi vehicle owners, including continuation of the Plug-in Taxi Grant (PiTG) beyond March 2024, VAT relief on the purchase of a taxi as a designation wheelchair accessible vehicle (WAV) and a reduction in VAT charged for on-street vehicle charging for taxi and PHV drivers, to align it with home charging.  

“Taxis are currently produced by a motor manufacturer, London Electric Vehicle Company (LEVC), and the pricing of the vehicle is a commercial matter for them.”