Zero-emission capable taxis will be exempt from the VED tax supplement that applies to cars over £40,000, the government announced in the Budget 2017.

Zero-emission capable taxis will be exempt from the VED tax supplement in April 2019

Consultations in advance of the April 2019 date when this change comes into effect, will determine how these ultra-low emission taxis will be defined.

At present, the VED for cars with a ‘list price’ more than £40,000 is supplemented by an additional fee of £310 a year. The list price is defined as the published price before any discounts have been applied.

An LEVC spokesperson said: “The Chancellor has listened to our request to remove electric taxis from the ‘luxury car’ tax bracket. The change to Vehicle Excise Duty announced today will, in the long-term, incentivise more cabbies to go electric, contributing to reduced emissions and improved air quality across the UK. However, we will be making the case to Treasury to bring forward these changes to reward early adopters for making the electric switch.”

In addition, plug-in taxis will benefit from funding for electric vehicle charging, announced by the Chancellor in the latest Budget.