Important Tax Update: Double Cab Pick-Ups Reclassified from 6 April 2025
We want to bring an important tax change to your attention that could impact your business vehicle decisions.
From 6 April 2025, double cab pick-up trucks will be reclassified as cars for tax purposes, affecting capital allowances, benefit-in-kind (BIK) taxation and may affect deductions from business profits. This marks a significant shift from the current treatment of these vehicles as commercial vans. However, VAT recovery rules will remain unchanged.
What’s Changing?
Currently, double cab pick-ups with a payload of at least one tonne are classified as vans for BIK and capital allowance purposes. However, from 6 April 2025, they will be taxed as cars, aligning with recent HMRC guidance.
These changes will apply to vehicles purchased or leased on or after 6 April 2025.
Key Implications:
Higher BIK Tax Charges – Employees using these vehicles for personal use will see a substantial increase in taxable benefit costs, as they will be taxed under the car benefit rules rather than the fixed van benefit charge. *
Reduced Capital Allowances – Businesses will no longer be able to claim full relief under the Annual Investment Allowance (AIA). Instead, tax relief will be given over a much longer period through writing-down allowances.
VAT Rules Unchanged – Businesses can still reclaim VAT on vehicles exceeding a one-tonne payload.
*You may currently claim ‘incidental use’ on your van and not report a BIK at all. This isn’t an option for a car so a significant increase in tax exposure is likely.
Transitional Relief – Act Before 6 April 2025
If you purchase or lease a double cab pick-up before 6 April 2025, the current tax treatment will apply until 5 April 2029, unless the vehicle is sold or the lease expires sooner. This offers a valuable opportunity to secure the existing tax benefits.
What Should You Do Now?
Consider purchasing or leasing a double cab pick-up before 6 April 2025 to lock in current tax benefits until 5 April 2029. You may wish to think about the impact these tax changes may have on the residual value of these vehicles.
Consider alternative vehicles such as single cab pick-ups, which will continue to be treated as vans for tax purposes.
Limit personal use of business vehicles to reduce exposure to BIK charges.
Seek tax advice to understand how these changes impact your business and tax planning.
Final Thoughts
While there has been industry pushback against these changes, there is currently no indication that the government will reverse the decision. We will keep you informed of any updates, but we recommend planning as though these rules will take effect from 6 April 2025.
If you have any questions or would like tailored advice, please get in touch with us.
The Team at Ellis Atkins
01306 886681
info@ellisatkins.co.uk