From 6th April 2025, significant changes are coming to the way double cab pickups are treated for VAT and tax purposes. These changes could impact both businesses and individuals who currently benefit from their classification as commercial vehicles.
Here’s a breakdown of the new rules, what’s changing, and what it means for you.
What’s Changing?
Under the current rules, double cab pickups qualify as commercial vehicles if they have a payload capacity exceeding 1 tonne. This classification allows owners to benefit from more favourable VAT and tax treatment.
From April 2025, this simple payload test will no longer apply. Instead, the classification will be based on whether the vehicle is primarily constructed for the purposes of carrying goods. HMRC will assess the vehicle as a whole at the point it’s made available to determine its purpose.
Most double cab pickups are expected to fall short of this new test and will instead be classified as company cars. This means they’ll be subject to the same Benefit-in-Kind (BIK) tax rules as cars, which could lead to higher tax bills for many businesses and individuals.
What Is a Double Cab Pickup?
For clarification, a double cab pickup typically has:
- A front passenger cab with a second row of seats that can accommodate about four passengers plus the driver.
- Four doors that open independently (whether the rear doors are hinged at the front or the rear).
- An uncovered pickup area behind the passenger cab.
Under the new guidance, vehicles with these features will likely fail the “commercial vehicle” test due to their suitability for private use.
What Are the Implications?
For those using double cab pickups as company vehicles, reclassification as a car means:
- BIK Tax: The tax is calculated on the vehicle’s list price (not necessarily the price paid) and the percentage is determined by the car’s CO2 emissions. This can range from 2% for fully electric vehicles to 37% for high-emission models.
- Loss of VAT Benefits: Double cab pickups may no longer qualify for VAT reclaim as a commercial vehicle, impacting overall costs for businesses.
Transitional Relief for Current Owners
There is some good news for those who already own or lease a double cab pickup under the current rules:
- Vehicles purchased before 6th April 2025 that qualify under the existing payload test can continue to benefit from the current treatment until the earlier of:
- The lease ending.
- The vehicle being sold.
- 5th April 2029.
What Should You Do?
This change is unwelcome news for many who rely on double cab pickups for both business and personal use. However, there are steps you can take to prepare:
- Evaluate Future Purchases: Consider whether a double cab pickup will still meet your needs given the new tax implications.
- Plan Ahead: If you’re planning to purchase a double cab pickup, doing so before April 2025 could allow you to lock in the current treatment.
- Seek Professional Advice: The rules can be complex, and their impact will vary depending on your specific circumstances.
If you’d like advice on how these changes might affect you or your business, don’t hesitate to get in touch with our team. As a modern, forward-thinking accountancy firm, we’re here to help you proactively navigate the evolving tax landscape and find the best solutions for your needs.
