The government has announced that Double Cab Pick-Ups will no longer be classed as commercial vehicles from April 2025 if the payload is more than 1,000kg (or 1,045kg with a hard top installed). The dates that the changes come into effect are:
- From 1 April 2025 for Corporation Tax, and
- From 6 April 2025 for Income Tax
These changes affect the tax treatment for capital allowances, VAT and Benefits in Kind, which is demonstrated in the table below:
| Current Tax Treatment | Change to Tax Treatment | |
| Â
   Capital Allowances |
Double Cab Pick-Ups are currently treated as commercial vehicles meaning they are currently main pool assets. The benefit of this treatment is the whole expense could be claimed through the annual investment allowance (maximum claim of £1m per annum), and an annual writing down allowance (WDA) of 18% each year on any unclaimed balance carried forward. Effectively, for most SMEs this meant 100% write off against profits. | The changes now mean Double Cab Pick-Ups purchased after 6 April 2025 will be subject to 6% WDA per annum and new expenditure will no longer qualify for the annual investment allowance, instantly becoming less attractive assets to purchase.
|
| Â
VAT |
Double Cab Pick-Ups are currently classified as commercial vehicles meaning businesses can currently reclaim the VAT back. | The budget was silent on any change to Double Cab Pick-Ups and VAT, meaning it is potentially still possible to reclaim the VAT subject to any other announcements being made. |
| Â
      Benefits in Kind |
Double Cab Pick-Ups are currently subject to a fixed benefit of £3,960, which at higher rates (40%) totals £1,584 tax liable on the employee.
Employers Class 1 NIC would apply to the benefit of £3,960 at the increased rate of 15%. |
The changes in the tax treatments affect Double Cab Pick-Ups purchased after 5 April 2025, while transitional BIK arrangements will apply for employers that have purchased, leased, or ordered a double-cab pick-up before 6 April 2025.
If the list price of a Double Cab Pick-Ups was £50,000 with CO2 emissions of 170g/km, the new BIK would total £18,500 per annum. A higher-rate taxpayer would now have a £7,400 tax liability, which is significantly more than the van benefit.
Employers Class 1 NIC will apply to the benefit of £18,500 at the increased rate of 15% increasing their tax cost as well.
|
Shelly O’Neil, Tax Advisor
If you know anyone who may benefit from our newsletters and updates, please feel free to forward this blog or ask them to opt in to our mailing list.
