HMRC Confirms Self-Employed Can Claim Ulez Tax Relief

Self-employed workers will be able to claim tax relief on the daily Ultra Low Emission Zone (Ulez) charge, HMRC has confirmed.

The tax authority said drivers of non-compliant vehicles will be able to claim if their journey was made “exclusively for the purposes of the trade”. The zone has now been expanded from central London to include all boroughs.

“This is a shot in the arm for sole traders, whose businesses will be hit by the Ulez charge,” Craig Beaumont of the Federation of Small Businesses (FSB) told the Financial Times.

HMRC said self-employed workers are able to claim tax relief on their travel expenses, including low emission zone charges, through their self assessment tax return. However, the relief does not apply to travel from home to work or non-business travel costs.

In a statement HMRC said: “Self Assessment customers are entitled to tax relief on travel expenses, including low emission zone charges, if they have been incurred wholly and exclusively for the purposes of the trade.

“When a self-employed individual claims an allowable expense, the amount is deducted fully from their taxable profits.”

Transport for London (TfL) said: “Rules around tax deductible expenses will apply in the usual way to Ulez charges. This is a matter for HMRC but it is likely to depend upon the nature of the operation and circumstances around incurring the charge as to whether it is tax deductible, as is the case for other expenses.”

The same rules apply to all low emission zones across the UK.

"Self Assessment customers are entitled to tax relief on travel expenses, including low emission zone charges, if they have been incurred wholly and exclusively for the purposes of the trade."
HMRC