Owners of double cab pickups are facing higher tax bills as the Government has announced that these vehicles will now be classified as company cars for tax purposes.
This change, introduced in the Budget, will lead to an increase in the benefit-in-kind (BIK) tax for drivers.
Effective from 1 April 2025 for corporation tax and from 6 April 2025 for income tax, double cab pickups with a payload of one tonne or more will be treated as cars for capital allowances, BIK, and certain business profit deductions.
However, the current capital allowance rules will continue to apply to double cab pickups purchased before April 2025. Additionally, transitional BIK arrangements will be in place for vehicles purchased, leased, or ordered before 6 April 2025.
This decision comes in the wake of a long-running debate about the tax treatment of vehicles, specifically whether they qualify as vans or company cars.
Classifying double cab pickups as company cars by default will have financial implications for fleets, as cars carry higher income tax and national insurance costs compared to vans. The same applies to any fuel benefits provided.
Employees will also face a significant rise in BIK taxes, potentially increasing their annual liability by thousands of pounds. Currently, all pickups are subject to a fixed benefit of £3,960.
Despite these changes, double cab pickups will remain classified as light goods vehicles (LGVs) for vehicle excise duty purposes.
If you need further assistance or advice regarding vehicle-related tax matters, please contact our team.
