Tax Changes for Double Cab Pickups Starting April 2025

Starting April 2025, significant changes will come into effect regarding the tax treatment of double cab pickups in the UK. These changes, announced in the Autumn Budget 2024, aim to align the tax treatment of these vehicles with their usage and characteristics. Here's what you need to know:

What Are Double Cab Pickups?

Double cab pickups are versatile vehicles with a front passenger cab that includes a second row of seats, capable of seating four passengers plus the driver. They also feature an uncovered pickup area behind the cab. These vehicles have been popular among businesses, particularly in sectors like agriculture and construction, due to their dual-purpose nature—suitable for both transporting goods and passengers.

The Current Tax Treatment

Currently, double cab pickups with a payload of at least one tonne are classified as vans for tax purposes. This classification offers several benefits:

• Lower Benefit-in-Kind (BIK) tax rates for employees using them as company vehicles.
• Full tax deductions for businesses under the Annual Investment Allowance or full expensing.
• VAT reclaimable for business use, provided there is no private use.

What's Changing?

From 6 April 2025, double cab pickups will no longer be classified as vans for income tax and capital allowance purposes. Instead, they will be treated as cars. This change will have several implications:

• Higher BIK Tax Rates: Employees using these vehicles as company cars will face higher BIK charges, calculated based on the vehicle's emissions and price.
• Reduced Capital Allowances: Businesses will no longer be able to claim full tax deductions in the year of purchase. Instead, tax relief will be spread over several years.
• VAT Treatment Remains Unchanged: The VAT classification will still depend on the payload capacity, with vehicles under one tonne classified as cars and those over one tonne as vans.

Transitional Arrangements

To ease the transition, the government has introduced some temporary measures:

• Vehicles purchased, leased, or ordered before 6 April 2025 will retain their van classification for BIK purposes until the earlier of disposal, lease expiry, or 5 April 2029.
• Contracts entered into before the change but fulfilled by 1 October 2025 will also benefit from the previous tax treatment.

Why the Change?

The reclassification aligns with recent legal interpretations and aims to ensure that vehicles primarily used for passenger transport are taxed similarly to cars. This move also addresses inconsistencies in the tax system, as highlighted in past legal cases.

What Should You Do?

If your business relies on double cab pickups, consider the following steps:

• Review Your Fleet: Assess whether your current vehicles meet your needs under the new tax rules.
• Plan Purchases Wisely: If you're considering acquiring a double cab pickup, doing so before April 2025 could help you benefit from the existing tax treatment.
• Consult a Tax Advisor: Understanding the full implications of these changes on your business is crucial.

These changes mark a significant shift in the tax landscape for double cab pickups. While they may increase costs for businesses and employees, careful planning and timely action can help mitigate the impact. Stay informed and prepared to navigate this new tax regime effectively.

N. Goddard

6.3.25