- Extended-cab pick-ups included in new tax rules
- Subject to same tax overhaul as double-cab pick-ups
- HMRC shuts loophole in new guidance
- Extended-cab pick-up trucks will be reclassified as cars, not commercial vehicles
HMRC has confirmed that extended-cab pick-ups will face the same forthcoming company car tax hike as double-cab models.
When the government announced a substantial company car tax hike for double-cab pick-ups, it seemed that extended-cab models might escape the increase. HMRC has now closed this potential loophole, confirming that they will also be hit by the rise.
From April 2025, double-cab and now extended-cab pick-up trucks will be reclassified as cars, which will see drivers of pick-ups such as the Ford Ranger and Toyota Hilux face higher tax bills. The Benefit-in-Kind (BIK) tax rate on the vehicles will change from a fixed LCV rate to figures based on CO2 emissions. With all pick-ups facing high emissions rates, drivers will see rates rise from around £800 (20% taxpayer rate) to over £4,000 per year, depending on the model.
HMRC continues to consider single-cab models to be primarily commercial vehicles, so drivers will not be affected by the tax changes and will retain the fixed LCV rates.
It was hoped that the reduced practicality of extended-cab pick-ups would exempt them from the new tax status, but HMRC has now confirmed that any pick-up truck with four doors, no matter how insignificant, will be considered a car and taxed accordingly from April.
Traditionally, the status of double-cab pick-ups has been assigned depending on the payload capability, with any vehicle able to carry one tonne or more being considered a commercial vehicle. However, a legal case between Coca-Cola and HMRC led to a ruling stating that marginal payload differences should not determine classification but should be based on whether the vehicle was clearly suited for transporting goods or people.
The government responded with a new set of rules, which it set out in the Autumn Budget: “The government will treat double cab pick-up vehicles (DCPUs) with a payload of one tonne or more as cars for certain tax purposes. From 1 April 2025 for Corporation Tax, and 6 April 2025 for income tax, DCPUs will be treated as cars for the purposes of capital allowances, benefits in kind, and some deductions from business profits.”
Updates to HMRC’s Employment Income Manual set out clear guidance on what qualifies as a pick-up. Regardless of whether previously described as an extended, extra, king or super cab pickup, guidance document EIM23150 says that any pick-up truck with four doors will be classified as a car for BIK purposes from April 2025. This applies even if the rear doors are small, rear-hinged, or lead to a minimal second row of seats. The decision marks a departure from the previous classification system, which relied on payload capacity rather than door configuration.
This reclassification also introduces broader tax implications for businesses using pick-ups. Previously, companies could claim capital allowances for vehicles which were not cars, meaning they could expense up to 100% of the cost of a double-cab pick-up. The reclassification of double and extended-cab pick-ups as cars will mean that they will be limited to just 18% from April and could also affect the application of vehicle expense deductions from profits.
The changes in BIK will only impact business users with a company-owned vehicle which is available for personal use. The reclaiming of VAT on vehicles will remain unaffected, so businesses purchasing double-cab pick-ups with payloads of 1,000kg or above will still be eligible to reclaim the VAT from the purchase.
More positively, employers who bought, leased or ordered a double-cab pick-up before the end of the tax year (6 April 2025) will not be impacted by the changes, as they will only kick in when the vehicle is sold, the lease ends, or after 5 April 2029 — whichever comes first.
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