The exemption, worth £1,550, will apply to new cabs purchased from April onwards, and follows the Autumn Budget announcement that zero emission taxis worth over £40,000 will no longer have to pay road tax under the vehicle excise duty charge system.

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

A small number of drivers who already own the vehicle or are expecting to take delivery in March will still have to pay an additional £310 charge.

However, manufacturer LEVC will compensate these drivers to ensure that they are not penalised for being early adopters of the cleaner vehicles.

The consultation is intended to help the government determine how to define these taxis, and to shape a mechanism to enable the Driver and Vehicle Licensing Agency (DVLA) to identify the vehicles on their database and apply an exemption.

Traditionally, black cabbies have had limited choice in what vehicle they can buy. This has meant that until now, cabbies have been forced to pay charges which their competitors – who can choose more affordable vehicles – can avoid.

Last March, London Taxi Company (also known as LEVC) opened the UK’s first car plant dedicated solely to the production of range-extended electric vehicles. The world’s first purpose-built, mass-market electric taxi will be built at the state-of-the-art, vehicle plant in Ansty.

The company invested more than £300m in the new site and the next-generation London taxi, which will be produced at the plant and exported around the world. The site has the capacity to build more than 20,000 vehicles per year.

The TX electric taxi will have an 80-mile electric range and up to 400 mile total range. All LEVC products use its eCity technology comprising of an advanced battery electric powertrain with a small back-up petrol generator. Applied to the all-new electric TX, the technology allows for a range of up to 400 miles including 80 miles pure electric range. They are already licensed for use in London. 

Shirley Rodrigues, deputy mayor for environment and energy in London, said: ‘These new electric taxis are at the forefront of green transport technology and will play a transformational role in the Mayor’s plan to phase out diesel and clean up the transport network. This will help to accelerate improvements to London’s toxic air.’

The tax break for greener taxis is part of a wider government plan to transform air quality in UK towns and cities. It builds on the £7,500 plug in taxi grant, which helps cab drivers buy a zero emission vehicle.

At Autumn Budget, the government also announced a £400m charging infrastructure investment fund to support the industry to roll out charge points for electric vehicles across the UK.

Chancellor 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 than we found it.’

HMRC consultation: Zero emission capable taxis: Vehicle Excise Duty rates, issued 6 March, closes for comment on 29 May 2018.

Report by Sara White