Government’s £4,000 Plug-in Taxi Grant set to end in April, raising cost pressures for electric taxi buyers
- Perry Richardson
- Jan 17
- 2 min read
The UK’s Plug-in Taxi Grant (PiTG) is expected to come to an end within the next few months, bringing down the curtain on a scheme that has underpinned much of the transition to purpose-built ultra-low emission taxis since 2019.
The closure in April 2026 will remove a direct price discount that has helped offset the higher purchase costs of electric and plug-in hybrid hackney carriages.
The PiTG was introduced to bridge the cost gap between internal combustion engine taxis and newer ultra-low emission vehicles. Under the scheme, buyers of eligible new taxis receive a discount of up to £4,000 or £3,000 at the point of sale, depending on the vehicle’s zero-emission range and emissions performance. The grant has been particularly significant for wheelchair-accessible taxis, where vehicle prices are typically higher than standard private hire cars.
Vehicles have been split into two categories. Category 1 has offered up to £4,000 for taxis capable of travelling at least 70 miles on zero-emission power with emissions below 50gCO2 per kilometre. Category 2 has provided up to £3,000 for vehicles with a zero-emission range of between 10 and 69 miles, also capped at 50gCO2 per kilometre. In all cases, the grant has only applied to new, purpose-built taxis.
Government support for new ultra-low emission taxis is due to close shortly, removing a subsidy worth up to £4,000 per vehicle and leaving drivers to absorb higher upfront costs
The scheme has been administered through Office for Zero Emission Vehicles, with vehicle eligibility determined using Worldwide Harmonised Light Vehicle Test Procedure data. Manufacturers have been required to apply for approval of specific models and variants, with formal sign-off linked to type approval handled by the Vehicle Certification Agency. Drivers and fleet owners have not applied directly, instead benefiting from the grant as a discount applied by dealerships.
The impending end of the PiTG is expected to have implications for the black cab fleet. Purpose-built electric taxis often cost tens of thousands of pounds more than legacy diesel vehicles, and operators say the grant has played a huge role in making the move to greener cabs viable. Without it, monthly lease payments and upfront deposits are likely to rise, particularly for owner-drivers.
Industry stakeholders also warn that the timing is sensitive. Many local authorities continue to tighten emissions standards through clean air zones and taxi licensing conditions, effectively pushing drivers towards ULEV models. The withdrawal of central government support risks widening the gap between regulatory ambition and the economic pressure faced by drivers.
Second-hand and converted vehicles have never been eligible for the PiTG, and its closure is unlikely to affect that segment directly. However, the reduced flow of subsidised new vehicles into the market may, over time, limit the availability of used electric taxis, slowing broader fleet turnover and pushing up prices as demand for fewer vehicles increase.
