Prospects for London’s new electric taxi have been boosted after the Treasury brought forward a £1,550 tax exemption to this April.

The British-built, zero-emission capable taxi had been liable for a luxury car tax, introduced in 2017, of £310 per year for five years, deterring cab drivers from upgrading to the greener vehicle.

In last autumn’s budget, the chancellor, Philip Hammond, announced taxis would be exempt only after April 2019 – around 15 months after the vehicle went on sale.

The Treasury minister Robert Jenrick, speaking at the electric taxi manufacturer LEVC’s showroom in London, said: “We’re very conscious that air quality continues to be a very important issue for the UK, particularly those with children in cities. We just wanted to go further and faster.”



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Taxi drivers welcomed the move. Steve McNamara, general secretary of the Licensed Taxi Drivers’ Association, said: “The government has finally listened to us and cabbies now won’t be paying the luxury car tax. It was stopping the trade from switching to the cleaner, greener taxi, and this decision will save cabbies £1,500, helping us lead the charge in cleaning up London’s polluted air.”

The TX, made by LEVC in Coventry, is now the only new taxi permitted to be licensed in the capital. The Treasury said that each taxi replacing an older vehicle could save seven tonnes of CO2 emissions per year.

Chris Gubbey, chief executive of LEVC, said the firm would compensate drivers who had already bought the vehicle or would receive one before April. He said: “There’s been some good lobbying and good listening. We applaud the government for that.”

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Addressing the tax’s original imposition, he said: “It was a miss. It was targeted for another segment, the £100-grand Teslas, but fair dos, they’ve recognised that.”

So far 18 vehicles have been delivered to London drivers, after teething problems with its meter delayed its entry into service. About 20 more deliveries per week are expected until April. LEVC said around 600 more are on order, half for the UK and half destined for the Netherlands.



Gubbey said the headline price of the LEVC taxi, which is a plug-in hybrid electric with a petrol generator back-up, remained a deterrent, but the company said drivers could save an average or more than £400 a month on fuel. Buyers also receive a £7,500 government grant.

The mayor of London, Sadiq Khan, welcomed the move but urged ministers to grant more powers to London to install charging points: “To truly transform London’s taxi fleet we also need to ensure we have the right rapid-charging infrastructure in place.”