Should Londoners sell their cars before the 2023 ULEZ extension?

From August 2023, the controversial London Ultra Low Emission Zone (ULEZ) will be expanded to cover almost every postcode inside the M25. So what does this latest ULEZ extension mean for anyone who lives or works in Greater London?

We’ve already posted a full guide to the London Ultra Low Emission Zone (ULEZ), but in short it means that if you have a petrol car that does not meet Euro 4 emission standards (registered before 1 Jan 2006) or a diesel car that doesn’t comply with Euro 6 standards (registered before September 2015) you will have to pay £12.50 every day to drive in the existing and the new ULEZ extension zone. Notably, this includes anyone visiting Heathrow airport.

Vans and taxis have their own rules: see our guide to the London Ultra Low Emission Zone (ULEZ) for vans.

Since its last expansion in 2021, the ULEZ currently covers the area inside the North Circular (A406) and South Circular (A205) roads. A separate Low Emission Zone (LEZ) for diesel lorries expands out to Greater London. The ULEZ charge applies all day, every day, apart from Christmas Day. This includes residents of London. You will only avoid this charge if you’re parked inside the zone and don’t drive on that day.

Transport for London (TfL) claims that, since plans for the ULEZ were announced in 2017, there are 44,100 fewer polluting cars driving in the zone every day, and toxic NO2 concentrations have been reduced by 44%. It also says that the number of state primary and secondary schools in areas exceeding legal limits for NO2 fell from 455 in 2016 to 14 in 2019, a reduction of 97%.

And the ULEZ certainly is enforced. After the October 2021 extension from central London to its current boundary, figures analysed by RAC showed that in the eight months from November 2021 and June 2022 £93.6 million was collected by TfL from drivers of non-compliant vehicles. That’s a run rate of £140 million a year flowing into the Mayor of London’s coffers.

The 2023 ULEZ extension

In late November 2022 the Mayor of London, Sadiq Khan, confirmed that from August 2023 the ULEZ will expand to cover the same area as the LEZ, which covers most areas inside the M25 motorway and some postcodes beyond it. The M25 itself is not included as that’s outside the Mayor’s grasp.

If you have an older car within the expansion zone or are moving to Greater London from August 2023 and plan on having a vehicle, the first thing you should do is check whether your car is already compliant by using the Transport for London’s ‘Check Your Vehicle’ web page.

Online car buying service Motorway (and commercial partner of The Car Expert) also has a ULEZ checker. Motorway says that it’s worth bearing in mind that currently, 94% of vehicles that drive in the ULEZ are compliant with the emissions standards that are in place.

If your car is not ULEZ compliant, and it looks like you’ll have to pay the daily fee, you can consider using Motorway to sell it to a dealer and then use the funds to buy a compliant vehicle. Electric cars are exempt from the charge, as are hybrid and mild hybrid cars that meet Euro 4 standards and above (petrol) or Euro 6 (diesel).

Map of London ULEZ extension for 2023
Map showing the ULEZ zones in 2019 (inner zone), 2021 (middle zone) and from August 2023 (outer zone)

Sell or bail out ahead of the ULEZ extension?

Research commissioned by Motorway in July 2022, when the latest ULEZ extension was proposed, revealed that nearly half (47%) of the 1,000 Londoners asked said they would sell their current car in order to buy an electric vehicle.  The research also uncovered that four in ten (39%) Londoners changed their car when the ULEZ was originally introduced due to having non-ULEZ compliant cars.

Of course, only a few London drivers will be able to afford a new electric car – with new prices upwards of £30,000 – or be able to use one if they live in a flat. The ULEZ expansion could mean having to give up the car completely for some, so let’s look at a couple of scenarios: downsize or give it up.

In the most extreme case, the annual bill for ULEZ residents with non-compliant cars can cost up to £4,550, based on paying the current £12.50 charge each day.

Take the example of a 2012 BMW 320d automatic saloon, which is not compliant. According to a well-known price guide, in November 2022 that car with 110,000 miles was worth £5,460 as a part exchange – fairly near what a dealer outside London might pay for it.

At a large used car retailer 2017 (compliant) newer 320d models were advertised between £14,500 and £16,900. So, it would take at least three years to recoup the cost to change using the 2012 BMW every day and paying the charge. However, if you are prepared to downsize, the £5,460 you may get for the BMW would buy a compliant 2017 or older petrol supermini such as a Ford Fiesta or a Volkswagen Polo.

Unfortunately, the inevitable reality is likely to be that a non-compliant car will now be losing value rapidly thanks to this new move by the Mayor of London. Obviously, anyone who lives and works anywhere near the M25 won’t want to buy it, and may well be trying to sell their own non-compliant car.

To make matters worse, the price of new and near-new cars is at record highs and interest rates on car finance are skyrocketing, making the cost to change cars very high at a time when households can least afford it.

The good news is selling a non-compliant car is still easy enough. Car buying services such as Motorway provide a platform to sell to dealers across the country and there is a North-South trade. London dealers will still be happy to take a non-compliant car as a part exchange because they’ll want your business and will be able to send your old car to auction.

Your car will ultimately end up being sold to a new owner somewhere further outside London, where the next owner won’t be taxed every day for driving it. Of course, this doesn’t solve the net pollution problem – it just pushes it from London to the rest of the country…

Small relief for some

There is help for some. From 30 January 2023, Londoners receiving certain disability and means-tested benefits can apply to TfL’s car and motorcycle scrappage scheme and receive a grant payment, or a grant payment plus one or two annual bus & tram passes.

A separate van and minibus scrappage scheme will also be available for sole traders, micro-businesses (ten or fewer employees) and charities.

However, with the rising cost of living, Londoners who are not in these groups may simply be unable to change cars. If you are an occasional car user you might consider joining a car club.

As we explain here if you don’t mind sharing a car which other people use, it may be worthwhile giving up car ownership, or replacing a non-compliant second car with a car club subscription. You pay by the hour or the day and fuel, insurance and city charges are included. Many clubs, such as Enterprise Car Club, have a cost calculator to work out how much you could save in total compared to a monthly finance payment, fuel, and insurance.

What’s next for ULEZ?

If you’re thinking that you’re fine because your car is compliant with the new ULEZ rules, don’t get too comfortable. Now that the Mayor of London has created the means to monitor and tax vehicles moving anywhere inside Greater London, he’s unlikely to stop at older cars.

After the 2023 ULEZ extension comes into force next August, the Mayor’s next step will almost certainly be to target Euro 5 petrol cars. Then all diesel cars. Then everybody else. And the current £12.50 charge will inevitably creep up to £15 a day, then towards £20.

Like any politician, Sadiq Khan knows that taxing motorists is easy and lucrative. However, at least most governments have the good taste to apply more tax to the most expensive cars and wealthiest owners. The Mayor of London, on the other hand, has chosen to tax the less well-off who can’t afford a new car – especially in the middle of a cost-of-living crisis – and who are now going to have to pay £12.50 every day to drive to work or take the kids to school.
Stuart Masson, editor

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Additional reporting by Stuart Masson

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