The end of the Double Cab Pickup as a company vehicle?

***EDIT: The guidance below was retracted by HMRC a week later. As at 13/03/24, there are no changes ***

In guidance released this week, HMRC have stated their intention to change the way a double cab pickup is classed for tax purposes.

Currently if a double cab pickup is purchased with a payload of over 1 tonne, it can be classed as a van rather than a car. This is hugely beneficial tax wise. If treated as a van, the tax savings could be in excess of £40,000 over its life compared to a car, as we calculated recently for a client.

The benefit in kind on a van is only £3,430 (without fuel) and 100% of the cost is generally deductible. If taxed as a car, the benefit in kind can be 37% of the list price (£14,060 if the list price is £38,000) and if purchased, potentially only 8% of the cost could be claimed.

From 1 July 2024, each pick up will need to be determined by “assessing the vehicle as a whole at the point that it is made available to determine whether the vehicle construction has a primary suitability as per the two-part test outlined at HMRC”. Having viewed the new rules, it is likely that in most cases a pickup will be classed as a car for tax purposes. Given HMRCs win against Coca Cola on the double cab vans a few years ago, this change is not unexpected.

Transitional arrangements

The new rules will come into effect 1 July 2024, so a double cab pickup with a 1 tonne payload capacity, leased or purchased before this date, could benefit from the preferential tax treatment until 5^th April 2028 or the date of disposal. This also covers orders made before 1 July 2024 and delivered afterwards, though documentation will be key for this.

Any double cab pickups ordered on or after 1 July 2024 will fall under the new rules and likely be treated as a car.

For business that already operate double cab pickups, the rules for these vehicles will stay the same until 5 April 2028 or the date of disposal, whichever is sooner.

What can we do?

This is where planning is key, if a business is looking to purchase or lease double cab pickup, based on the current rules, then doing so as soon as possible would seem logical. In our view it would also make sense to review the vehicle strategy for a business based on the new rules and working out which is most tax efficient.

We would always recommend a business speaks to their accountant before buying an asset, the £40,000 potential saving mentioned above was not by accident and we at Mountain Top Accountants can help a business through the many HMRC vehicle rules.

Links to HMRC on this:

EIM23151 – Car benefit: double cab pickups 1 July 2024 onwards – HMRC internal manual – GOV.UK (www.gov.uk)

EIM23115 – Car benefit: vehicle of a construction primarily suited for the conveyance of goods or burden of any description: meaning of construction – HMRC internal manual – GOV.UK (www.gov.uk)

This blog does not constitute tax advice and should not be used for tax planning unless agreed by Mountain Top Accountants. Mountain Top Accountants accept no liability in the event of the information contained in the blog being incorrect, incomplete or out of date.