The Autumn Budget has dealt a blow to double-cab pickup buyers as the Chancellor of the Exchequer reveals a huge tax hike on the popular commercial vehicle.
At the start of the next financial year in April 2025, all new double-cab pick-ups will be reclassified as cars for taxation purposes, dramatically increasing costs for company drivers and businesses.
The 170-page Autumn Budget document contains very few surprises, but page 138 includes this text: “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.”
Double-cab pick-ups are usually considered commercial vehicles if their payload is rated at 1,000kg or more. This grants drivers using them as company cars a lower rate of Benefit-in-Kind taxation, which, for a 20% taxpayer, works out at about £66 a month. If BIK rates are aligned with cars, that changes to being based on a percentage of the value of the pick-up, which means a driver using a Ford Ranger Wildtrak 2.0 as a company vehicle will see their £66 monthly tax bill rise to around £300, with a higher-rate taxpayer facing a £600 monthly charge.
The changes will also affect capital allowance rules. Double-cab pick-ups currently qualify for a full capital allowance, allowing businesses to expense 100% of the value of their pick-up. The new reclassification will put pick-ups in the same category as cars, reducing the allowance to just 18%. Budget changes will also affect a business’s ability to offset vehicle expenses against profits.
One brighter note is that the Treasury’s Autumn Budget document doesn’t mention anything about changing how double-cab pick-ups are treated for VAT purposes, meaning that businesses buying double-cab pick-ups with payloads of 1,000kg or more will be able to reclaim the VAT element without difficulty.
It’s not the first time the government has tried to make these changes, with the previous Conservative government announcing similar updates in February 2024 before making a U-turn a week later following a vocal backlash from businesses and the farming community.
While not directly related, the changes in defining a double-cab pick-up follow the conclusion of a lengthy legal battle between Coca-Cola and HMRC.
Presiding over the case, Lady Justice Asplin concluded that a vehicle should be clearly suited to one task or another. In cases where it’s not clear if a vehicle is primarily suited for carrying goods or people, it should be classified as a car.
A transitional arrangement will be in place before the changes come into force, ensuring that any current owner or driver isn’t affected.
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Anybody buying, leasing, or ordering a double-cab pick-up before 6 April 2025 will benefit from the current classification until the vehicle is disposed of or handed back to a leasing company. The transition period ends on 5 April 2029, when everybody affected will pay the new tax rates.
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