HMRC has reversed its decision to make business owners reclassify their double-cab pickups as cars for employment benefits and capital allowance purposes. The U-turn was made just days after announcing the new rules as a result of the newly elected Labour government. Pickups will revert to being treated as cars for certain taxation purposes from April 2025 instead.
U-Turn On Double-Cab Pickups
Historically, for the purposes of Benefits In Kind (BIK) and Capital allowances, HMRC has interpreted the meaning of ‘car’ in line with the definition used for VAT purposes. This means that HMRC accepts that vehicles like double-cab pickups, with a payload of 1,000kg or more, primarily suited to the conveyance of goods, were goods vehicles, not cars. This summer, they announced that double-cab pickups were to be reclassified as cars. However, this move has now been delayed.
What Is A Double-Cab Pickup?
A double-cab pickup is a type of truck that features two rows of seats, providing seating for up to five or six passengers, depending on the configuration. The “double-cab” refers to the larger cabin size compared to a single-cab (which has only one row of seats) or an extended-cab (which has a smaller second row of seats).
Key features of a double-cab pickup include:
- Four Doors: It typically has four full-sized doors for easier access to the rear seats.
- Passenger Space: Ample legroom and headroom in both rows, making it suitable for families or work crews.
- Cargo Bed: While the bed is often shorter than in single-cab or extended-cab models, it still offers substantial cargo space.
Double-Cab Pick Tax Relief
Suppose you purchase a double-cab pickup with a payload of one tonne or more before the 1st of April 2025 for corporation tax or the 6th of April 2025 for income tax. In that case, you can enjoy the favourable tax treatment available on vehicles primarily suited to the conveyance of goods. These include:
- 100% annual investment allowance
- Full-expensing
- Flat rate benefit in kind value
New Rules
Double-cab pickups purchased after the above date will lose the beneficial treatment as they will be classified as cars. Transitional arrangements for capital allowances will apply where a contract to purchase or lease a double-cab pickup is entered into on or before the date of the change, as long as expenditure has been incurred, i.e. money has changed hands, before the 1st of October 2025.
Employers that have purchased, leased or ordered a double-cab pickup before the 6th of April 2025 can benefit from the previous benefit in kind treatment until the earlier disposal of the vehicle, expiry of the lease, or the 5th of April 2029. Double-cab pickups with a payload of less than one tonne will continue to be treated as cars for taxation purposes.
How Does This Affect You?
In addition to a reduction in capital allowances for these vehicles, the change is likely to trigger significant benefits in kind charges for drivers as well as Class 1A NIC for employers. If you own, lease, or are considering acquiring vehicles of this nature, contact us to discuss the implications of these changes for your business.