A car scrappage scheme is designed to incentivise you to swap your older, high-emission car for a newer, more environemntally friendly model that's cleaner and more fuel-efficient.
But where did the idea of a car scrappage scheme come from, how exactly do they work and why might you consider making use of one? We'll answer all these questions in our expert guide to car scrappage schemes in the UK.
Why do car scrappage schemes exist?
In simple terms, a car scrappage scheme gives you a financial incentive to trade in your old car for a new one, which will produce fewer nasty emissions and burn less fuel.
With the UK pushing towards net zero emissions, these schemes play a role in reducing pollution and encouraging drivers to adopt cleaner transport options, such as hybrid and electric vehicles.
Car scrappage schemes are also a useful tool for stimulating the economy, particularly the automotive industry, which has faced challenges from supply chain disruptions, inflation, and declining consumer spending.
The first UK-wide scrappage scheme was introduced in 2009 as a response to the financial crisis, with the government allocating £300 million to replace 300,000 old cars. This resulted in a 25% increase in car sales.
How do car scrappage schemes work?
Scrappage schemes typically offer a financial incentive – either through government funding or manufacturer-backed deals – to drivers who trade in an older, high-emission vehicle for a newer, more efficient model.
Government-backed schemes, such as London’s ULEZ scrappage initiative, require participants to meet specific eligibility criteria. Manufacturer-led schemes vary, with some focusing on trade-ins for specific models or fuel types.
As an example, in 2009 the UK Government wanted to get 300,000 old and polluting cars off the road. It pledged to put £1000 towards the sale of each replacement new car, with another £1000 put forward by the supplying car dealer. For you to qualify to make use of the car scrappage scheme, your car had to be ten years old or older and you had to have owned it for at least 12 months.
Will there be another Government backed car scrappage scheme?
As of 2025, no UK-wide government-backed scrappage scheme is in place. However, discussions continue regarding incentives to support the transition to low-emission vehicles in anticipation of the 2030 ban on new petrol and diesel car sales.
The introduction of Clean Air Zones (CAZ) around the UK has also brought with it a range of scrappage schemes, aimed at helping local residents upgraded to emission-compliant cars. Some are now finished, including the London ULEZ scrappage scheme, but one is still active.
TfL ULEZ car and motorcycle scrappage scheme
The Transport for London (TfL) scrappage scheme, which ran until the last few months of 2024, has now closed. Previously, it offered up to £2,000 for eligible residents of London’s 32 boroughs who received certain benefits, such as Universal Credit, Child Tax Credit, Pension Credit, and Working Tax Credit, to replace non-compliant vehicles.
As of 2025, no further funding has been announced for the scheme, and drivers of non-compliant vehicles must continue paying the ULEZ charge of £12.50 per day when driving in the zone.
Birmingham CAZ scrappage scheme 2025
The Birmingham CAZ scheme provides eligible participants with three options: a £2,000 scrappage grant paid directly into your bank account; a £1,600 scrappage grant combined with £1,500 in Transport for West Midlands (TfWM) travel credit, totaling £3,100; a £1,000 scrappage grant plus two TfWM travel credits of £1,500 each, which means a total incentive of £4,000.
To be eligible, you need to own a non-compliant vehicle and either live or work within the CAZ. Applicants must have been the registered keeper of the vehicle since before 1 June 2021 and meet specific income or employment conditions. There's no set date for the scheme to end – it will continue until the allocated funding is used up.
Manufacturer scrappage schemes
While the government does not currently operate a national scheme, and many manufacturers' trade-in incentives have ceased, there is one left.
Peugeot Switch Grant 2025
To incentivise customers to trade in their cars and switch to electric, Peugeot offers what it calls the Switch Grant, which can provide substantial savings on electric models. The exact value varies by car, but can be worth up to £7000 if you buy a new Peugeot E-Traveller Allure. Go for a Peugeot E-208 and you could get up to £5500 off.
Other cars covered include the E-2008, the E-308 and E-308 SW, E-3008, E-5008, and E-Rifter. To qualify you'll need to order your car before 31 March 2025.
A scrappage scheme is a financial incentive – usually run by the government or a car manufacturer – that incentivises you to swap your old car for a new model that produces fewer harmful emissions.
Hyundai, Kia, Lexus, Mazda, Renault and Toyota have all run a scrappage scheme, but they're not currently active.
There is currently no government scrappage scheme, although Birmingham authorities are offering incentives for residents to upgrade their cars for the city's Clean Air Zone.
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