Twin Cab Pickups Tax Changes

Announced in the Autumn Budget 2024, all double cab pick-up (DCPU) vehicles will once again be classified as cars for tax purposes, which will lead to significant tax increases.

Potentially a three-fold benefit-in-kind increase which is a devastating blow for tradespeople who rely on their trucks for work.

Primarily types of crew cab with a payload over 1 tonne have been classed as a ‘van’ for income tax and national insurance purposes, and only those with a payload of under 1 tonne deemed as ‘cars’.  Over the years, there has been a number of discussions and court cases with HMRC surrounding the classification of what ‘van’ actually means.

Autumn Budget 2024

“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.”

Impact of DCPU being a Car

From 1 April 2025 for corporation, and 6 April 2025 for income tax, DCPUs with a payload of one tonne or more will be treated as cars for the purposes of capital allowances, benefits in kind (BIK) and some deductions from business profits. This reclassification means that drivers will be liable to a much higher BIK tax, depending on the vehicle specifications.

The existing capital allowances treatment will apply to those who purchase double cab pickups before April 2025.

Furthermore, the transitional BIK arrangements will apply to employers that have purchased, leased, or ordered a double cab pick-up before 6 April 2025. In this case, they will be able to use the previous treatment, until the earlier of disposal, lease expiry, or 5 April 2029.

Examples

If ordered or owned before the rule change, a Toyota Hilux Invincible X 2.8 Auto, would be treated as a commercial vehicle, taxed at a flat rate of £3,960 for 2024/25. As a 40% taxpayer, this would mean an annual BIK tax of £1,584.

If ordered after April 2025 as a company car with a P11D value of £47,542 and CO₂ emissions of 259g/km, the BIK rate would be 37%, totalling £17,591. That same 40% taxpayer, this now equates to £7,036 annually, an increase of £5,452 from the current tax rate.

Based on a company-owned Ford Ranger Wildtrack with the 2.0-litre turbo diesel engine and an automatic gearbox, this has a total value of £40,350. That particular truck emits 230g/km of CO2, putting it the highest BiK bracket for company cars and as such you’ll have to pay 37% of the truck’s value per year – bringing the total bill to almost £15,000.

Recommendation

In particular for businesses in construction, farming and other industries where pickups are used we recommend reviewing their current fleet and assessing the impact of the changes taking place in the new tax year.

As the new regulations do not come into effect before April 2025, we would advise to our clients to consider replacing some of the existing vehicles for DCPUs or consider taking out new DCPU leases before the end of the qualifying period to extend the beneficial tax treatment for up to 4 years.

Get in touch

If you would like further information on these areas, please contact one of the team.

Phone: 01508 333040

Email: office@abcabacus.co.uk

Website: abcabacus.co.uk