With the Autumn 2024 Budget announcement, many expected some changes, but one of the most significant impacts for many is the reclassification of double-cab pickups. These vehicles, previously classified as light commercial vehicles for tax purposes, will now be treated as passenger cars. This decision will affect numerous businesses and drivers across the UK. Initially met with significant opposition, the change was put on hold earlier in the year but has now been confirmed and is set to take effect.
In the recent Autumn Budget 2024 announcement, significant changes were introduced regarding the tax treatment of double-cab pickups with a payload of one tonne or more. Starting in April next year, these vehicles will be classified as passenger cars for tax purposes. As a result, double-cab pickups will no longer benefit from the favorable tax treatment traditionally applied to light commercial vehicles, which typically enjoy lower tax rates. This change marks a substantial shift in policy and is likely to have a considerable impact on businesses and individuals who rely on these vehicles for their operations.
The policy regarding the tax classification of double-cab pickups has undergone a notable shift since the start of this year. Initially, at the start of 2024, it was announced that double-cab pickups would be reclassified for tax purposes to be treated as standard cars. This change meant significantly higher tax liabilities for companies and employees using these vehicles, sparking widespread concern among affected parties.
The policy’s implementation was met with immediate backlash from industries that heavily rely on double-cab pickups, such as construction, farming, and small businesses. Critics argued that treating these vehicles as cars ignored their practical and commercial functions, creating an unfair financial burden and potentially discouraging their use in critical industries.
In response to this pushback, the government reversed the policy a week after due to the backlash it was met with.
However, the Chancellor has now updated the vehicle definition for tax purposes once again. As it stands, any double cab pickup with a payload of one tonne or more will be classified as a car.
These changes will have the greatest impact on individuals and businesses that rely on double-cab pickups for commercial purposes. The reclassification will directly affect Benefit-in-Kind (BIK) taxation, increasing the tax burden on employees who use these vehicles. Additionally, it will influence capital allowances, reducing the ability to claim tax relief for the purchase of these vehicles as business assets. Furthermore, it will impact business expense deductions, limiting the deductions available for operating costs associated with these vehicles. Collectively, these changes are expected to significantly increase the cost of owning and using double-cab pickups for business purposes.
Currently, a double cab pickup with a payload capacity of one tonne or more is classified as a light commercial vehicle. If you drive a company-owned truck in this category, you’ll be charged a flat Benefit-in-Kind (BIK) rate of £3,960 per year.
From April 1st, 2025, double cab pick-ups will be classified as passenger cars for Corporation Tax purposes. Additionally, from April 6th, double cab pick-ups will fall under the same classification for Benefit in Kind (BIK) and profit deductions for Income Tax.
Businesses will only be allowed to claim capital allowances on double cab pick-ups if they are purchased or ordered before April 2025. Any pick-up ordered or purchased after this deadline will fall under the passenger car capital allowance rules, reducing the tax benefits previously available under the light commercial vehicle classification.
HMRC has announced that any Benefit-in-Kind (BIK) arrangements for employers who have already purchased, ordered, or placed orders for double cab pick-ups before April 2024 will retain their current tax treatment. This will remain in effect for the duration of the vehicle lease or until the vehicle is disposed of, or by April 5th, 2029, whichever comes first. This provides some flexibility for businesses to manage the transition and adapt to the new regulations.
So, if you look at this from both businesses and employees, those paying BIK will see a significant rise. Looking at one of the most popular double cab pickups in the UK, the Ford Ranger, it has listed CO2 emissions of over 221g/km. This puts it in the 37% tax bracket, resulting in a Benefit-in-Kind (BIK) cost of approximately £5,876.93 per year for a 40% taxpayer, or about £489.74 per month.
What Does This Mean for Double Cab Pick-Up Owners?
For both individuals and businesses using double cab pick-ups, this reclassification represents a significant change. With these vehicles now being treated as passenger vehicles for tax purposes, it’s crucial to account for the increased Benefit-in-Kind (BIK) rates.
Planning ahead is essential—consider how these changes may impact your financial goals and business operations. Adapting to these adjustments now can help mitigate potential tax implications in the future.
To stay informed about all the recent tax changes from the latest budget, take a closer look at the Autumn Budget here. Alternatively, feel free to reach out to us for more personalised advice.
Order your pick-up before April 6th, 2025, to avoid the upcoming changes. Secure your vehicle now and ensure you benefit from the current tax treatment before the reclassification takes effect. Don’t miss this opportunity—place your order today!