A £23m van scrappage fund to help micro businesses and charities in London scrap older, polluting vans and minibuses, has been announced.

The offer comes ahead of the 24-hour, seven-days-a week Ultra Low Emission Zone (ULEZ) regime hits in central London from 8 April.

Options include:

A payment of £6,000 to scrap a non-compliant van or minibus and help with running costs of a new electric vehicle, or

A payment of £3,500 to scrap a non-compliant van or minibus which can be used to:

• purchase a newer ULEZ compliant Euro 6 vehicle;
• access third party offers from rental and sharing services across London, including Zipcar, Northgate Hire, Enterprise and Europcar;
• support ongoing business operations.

Those applying for the top payment of £6,000 to scrap the vehicle and use towards the running costs of an electric vehicle will be eligible for a maximum three month ‘rebate’ from the ULEZ to account for the longer lead-in time to purchase an electric model. The three-month rebate period will start from either the date of application or launch of the ULEZ, depending which is later.

To qualify a micro business must have:

• 10 or fewer employees;
• Up to £632,000 turnover or £316,000 balance sheet total up to current financial year; and
• Companies House registration as an active company or VAT registered.

Charities must be registered with The Charity Commission.

The Government offers grants to cover the capital cost of electric vans. These grants reduce the cost of an electric van by up to 20% or a maximum of £8,000. The new scheme has been designed to be complementary to this and aims to help micro businesses and registered charities who have vans and minibuses that do not comply with the new ULEZ standards. Businesses and charities will have to be registered in London or have been frequently observed driving in the Congestion Charging Zone, ie at least 52 times during the past six months.

Sadiq Khan, The Mayor of London said: “To get a grip on London’s lethal air and protect public health we need to rid our streets of the most polluting vehicles. With six weeks to go until the ULEZ starts in central London many Londoners are looking at ways to change to cleaner transport options.

“Motorists need our help and support to take positive action, and I am proud to today open this £23m scrappage scheme today to help enable micro businesses and charities to scrap polluting vans and minibuses, and switch to cleaner vehicles. The van scrappage scheme will be followed later this year with a £25m fund to help lower-income households scrap polluting cars.

“Air pollution is now widely recognised as a national health crisis that is stunting the lung development of our children and leading thousands of premature deaths. We need government ministers to help fund a national scrappage scheme targeted at cities across the UK that will support all motorists to ditch their polluting cars and help clean our filthy air once and for all.”

Sue Terpilowski OBE, London Policy Chair for the Federation of Small Businesses (FSB), said: “We welcome this initiative to support micro businesses with a diesel scrappage scheme. FSB London have long argued of the need to help businesses struggling with the cost of doing business.

“The scheme will support many businesses and we hope the Mayor can work with Government to call for extra matched-funding, and, for an all-encompassing retrofit scheme to help those with essential business vehicles that will not be eligible for this scheme”

Gerry Keaney, chief executive of the British Vehicle Rental & Leasing Association (BVRLA), said: “This initiative will provide vital and timely assistance for SME’s that need to upgrade their vans ahead of the London ULEZ being introduced on 8th April. London has set an ambitious timeline for its clean air zone and the Mayor has recognised the fact that some businesses will need financial support in upgrading their vehicles. We welcome the leadership he has shown in calling for a national scrappage fund that can be used to help urban businesses and residents switch to cleaner vehicles or other modes of transport.”

The scheme can be applied online at www.tfl.gov.uk/scrappage-scheme. To check whether a vehicle meets the ULEZ standards go to www.tfl.gov.uk/ulez.