HMRC Backtracks on Double Cab Pickup Update: End of the Road or Just a Pit Stop?

29 Feb 2024

HMRC recently hit the brakes on their latest update on the tax treatment of double cap pickups (DCPUs) for benefit in kind purposes. However, statements from the Treasury indicate that this saga hasn’t reached its conclusion.

What is a car?

Currently, the technical starting point when determining whether a vehicle is a car for a benefit in kind is that every “mechanically propelled road vehicle” is a car unless it meets certain exceptions. The key exception relevant to this update is if the vehicle is unsuitable to be used as a private vehicle.

This definition matters because, if a vehicle is classified as a car, both employer and employee will face a tax charge much greater than if it was van.

What is a van?

In comparison to the above, a van is a goods vehicle, i.e. a vehicle primarily suited to conveying goods, and which is not designed to weigh more than 3500kg.

Double cab pickups – special treatment

A DCPU is a pickup truck with an additional row of seats situated behind the driver. As there is nothing about these vehicles that makes them unsuitable for private use, under the definitions above, they could be classified as a car.

Since 2002, HMRC have instead used the VAT definition to determine whether a DCPU is a car or van for benefit in kind purposes. Vitally, for VAT purposes, a vehicle with a payload of 1000kg or more will be accepted as van. This means that many double cab pickups have therefore qualified for the beneficial tax treatment afforded to vans. This has proved advantageous for many businesses and individuals over the years.

Recent updates and subsequent U-turn

HMRC’s initial update stated that from July 2024, in line with recent case law, they would move away from the VAT definition when classifying DCPUs for benefit purposes. The key question would once again be the primary suitability of the vehicle, meaning the vast majority of DCPUs would be classified as cars.

Subsequent backlash, as many employees would have faced increased tax charges, has forced the HMRC to reverse this decision. The Government also announced plans for legislation to confirm the tax treatment in a future finance bill.

Let us take the wheel

If you would like more information on the points raised above, or the tax treatment of company vehicles, talk to us:

Team members related to this article...

Simon Baker

Commercial Partner

Simon is passionate about developing businesses and supporting them through change and growth, from practice management issues to succession planning.

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James Clark

Tax Partner

James’ tax expertise and enthusiasm for all things tax has been instrumental in the success of the Tax Consultancy service at WR Partners.

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Fran Johnson

Audit & Commercial Partner

Fran specialises in providing high-quality audits to a wide variety of clients including owner-managed businesses, large corporate clients and academy trusts.

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