It follows Mayor of London Sadiq Khan's decision to expand London's Ultra Low Emission Zone (ULEZ) London-wide in August this year.
The zone was first introduced in April 2019 in a bid to reduce air pollution and charges non-compliant vehicles – mostly diesel cars that are more than six years old and petrol cars that are more than 15 years old – £12.50 for each day they are in the zone.
Already around 94 per cent of vehicles driving in inner and central London, and 85 per cent of vehicles driving in outer London already meet ULEZ standards.
The new scrappage scheme and grace periods are designed to help drivers of the remaining non-compliant vehicles prepare.
Londoners receiving certain means-tested benefits and non-means-tested disability benefits can apply for cash grants of up to £2,000 to scrap their non-compliant cars or motorcycles. They can also choose to receive a higher-value package comprising up to two free annual bus and tram passes and a lower cash grant.
Disabled people who want to scrap or retrofit a non-compliant wheelchair-accessible vehicle will be able to apply for grants of £5,000 to reflect the higher cost of these vehicles.
Disabled people can also apply for a nominated driver who lives at a different address if they do not drive themselves.
Currently, the cheapest new electric car available in the UK starts at over £22,000 although second-hand cars can cost significantly less.
Charities, sole traders and businesses with 10 or fewer employees registered in London will also be able to scrap a van for a £5,000 grant, a minibus for a £7,000 grant, or receive £5,000 to retrofit certain vans or minibuses.
Disabled people will also received extended grace periods for ULEZ, which will provide exemptions until October 2027 for recipients of certain disability benefits.
"I took the difficult decision to expand the ULEZ because it will save lives, help tackle the climate crisis and reduce congestion," Khan said.
"We have made huge progress in central and inner London but there is much more to do in outer London.
"Clean air is a fundamental human right – and everyone deserves to breathe clean air including those in outer London. Around 4,000 Londoners are dying prematurely each year due to toxic air, with the greatest number of deaths attributable to air pollution in London's outer boroughs.
"It is causing people to develop life-changing illnesses, such as cancer, lung disease, dementia and asthma, and leading to children growing up with stunted lungs."
Alex Williams, TfL's chief customer and strategy officer, said: "Any premature death and disease linked to poor air quality is unacceptable. Pollution is a silent and indiscriminate killer that is disproportionately blighting the outer London boroughs, which is why we are expanding the ULEZ across the whole of the capital."
In October, it emerged that the expansion of ULEZ helped TfL to rake in an additional £93.6m in revenue from drivers.
