Double-cab pick-ups: End of the road?

Double-cab pick-up in field 15th February 2024

*An update on this has since been posted. Click here to read the updated information.*

 

 

The tax treatment of double-cab pick-up trucks is set to change with effect from 1st July 2024, and will see the vehicles lose their status as ‘commercial vehicles’ when it comes to company car taxation. This could see a potentially significant increase in personal tax bills for company car drivers.

 

 

The Current Position

HMRC currently interprets the legislation in line with the definitions used for VAT purposes, which sees double-cab pick-ups with a payload of 1 Tonne or more being classified as a ‘commercial vehicle’ for tax purposes. This means that double-cab pick-ups currently qualify as a van, rather than a car for taxation purposes, which qualifies them for more generous tax treatment.

 

 

The Position From 1st July 2024

From 1st July 2024, HMRC will alter its interpretation of the legislation and stop using the VAT payload-based definition of a ‘car’ or ‘van’ following the judgement reached in the court of appeal case Payne & Ors (Coca Cola) V R & C Commrs (2020) BTC19.

 

Going forwards, the classification of pick-ups will need to be determined by assessing the vehicle at the point that it is made available, to assess whether the vehicle is primarily suited to the conveyance of goods or burden of any description.

 

HMRC expects that, because these vehicles are equally suited to the conveyance of passengers, the majority, if not all, of double-cab pick-ups will be classified as a ‘car’, rather than a ‘van’ as is currently the case.

 

As an illustration for the 2023/2024 tax year, the below table compares car & van tax implications for a double cab pick-up with a list price of £33,000 and CO2 emissions exceeding 160g/km. This example does not account for any fuel benefit.

 

     Van      Car
Taxable Benefit      £3,690.00      £12,210.00
Employee – Income Tax (Basic Rate)      £738.00      £2,422.00
Employer – Class 1A National Insurance      £101.84      £1,684.98

 

 

If fuel is provided to an employee for personal journeys, then the flat-rate benefit for a van is £757 in 2023/2024, whereas cars attract a fuel benefit of £27,800 in 2023/2024, which is then adjusted based upon the CO2 emissions of the vehicle.

 

 

Transitional Arrangements

Where an employer has purchased, leased, or ordered a double-cab pick-up before 1st July 2024, they will be able to rely upon the previous interpretation until the earlier of disposal, lease expiry, or 5th April 2028.

 

 

Capital Allowances

These amendments will also directly affect the treatment of double-cab pick-ups for capital allowances purposes. The amendment date remains the same, being 1st July 2024, however the transitional period is much shorter and is explained below.

 

Contracts entered into before 1st July 2024, will qualify for the previous treatment, a transitional period will be allowed for expenditure incurred after this date but before 1st January 2025.

 

 

Get In Touch

For more information or advice, please contact either myself or your local Whitings LLP office.

 

Disclaimer - All information in this post was correct at time of writing.
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