News

Tax Changes For Double Cab Pick-Ups

15 Jan 2025


New Rules From April 2025

The Autumn Budget 2024 confirmed that from April 2025, double cab pick-ups will be treated as cars for tax purposes rather than commercial vehicles. This will apply for both capital allowances and benefit in kind company car tax purposes.

The Budget documentation confirmed that HMRC will no longer use VAT rules to classify double cab pick-ups as either “cars” or “vans” for capital allowances and benefit in kind purposes.

Transitional Arrangements

There will be transitional arrangements available whereby the existing favourable classification as a commercial vehicle will continue.

For benefit in kind purposes, where a double cab pickup is purchased, leased, or ordered before 6 April 2025, an employer can continue to use the previous rules until the earlier of:

  • Vehicle disposal,
  • Lease expiry, or
  • 5 April 2029.

Example – An employer leases a double cab pick-up on 10 February 2025 for use by an employee. Since this lease began before 6 April 2025, the employee will be treated as receiving a commercial vehicle (or van) for company car tax purposes until the earlier of the lease expiry or 5 April 2029.

For capital allowances purposes, transitional arrangements will apply when expenditure is incurred on a double cab pick-up as a result of a contract entered into before  April 2025, and the expenditure is incurred before 1 October 2025. In these circumstances a double cab pick-up (even one with a payload of one tonne or more) will continue to be treated as a commercial vehicle.

Example – A business places an order to purchase a double cab pick-up on 1 January 2025 and pays a 10% deposit. The vehicle is delivered on 1 June 2025 and the balance of 90% is paid.  The full cost of the double cab pick-up will be treated as being incurred on a commercial vehicle as it was ordered before April 2025 and paid for before October 2025.

Under VAT rules, these vehicles are currently categorised by payload capacity: those with a payload under one tonne are classified as cars, while those with one tonne or more are classified as vans. This approach, adopted for practical reasons, will be replaced for capital allowances and company car tax purposes following legal clarification.

Instead, double cab pick-ups will be assessed based on their overall construction at the time they are made available. Since most are designed to be equally suitable for carrying goods and passengers, they will typically be classified as cars for tax purposes under the new rules.

VAT

It is important to note that there is no change to the VAT treatment of double cab pick-ups. Provided the pick-up has a payload of 1 tonne or more, it is considered to be a goods vehicle for VAT purposes and VAT can be reclaimed by the business according to the normal rules.

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Team members related to this article...

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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