Changes to the rules on vehicle excise duty (VED), coming into force on 1 April 2018, should encourage black cab drivers thinking of investing in zero emissions vehicles, according to Nigel Morris, tax director at accounting firm MHA MacIntyre Hudson.

Under current rules drivers who purchase a vehicle with a list price of more than £40,000 pay an additional rate of VED of £310 for five years after the end of their first vehicle excise licence. In the Autumn Budget 2017 the government announced that from April 2019 they would exempt zero emission capable taxis from the additional rate. On 6 March 2018, they went one step further and announced that all eligible taxis bought from April 2018 will never have to pay the additional rate at all.

Morris said: “This is good news for black cab drivers because the impact of the standard rules on these vehicles is particularly striking. Black cabs must meet certain technical specifications, such as turning circles and disability access, which don’t apply to other vehicles used as taxis. As a consequence of these technical requirements, the models produced by the principal manufacturers are priced well above the £40,000 threshold.

“The challenge now is how the typical driver will fund the £60,000 plus list price of these vehicles. Additional support and incentives may be required to protect the livelihoods of black cab drivers and maintain the number of taxis available.”