Following a U-turn earlier in 2024 when the Conservative Government listened to concerns in the motor and farming industries, the Labour Government has reignited plans to remove the tax perks associated with double cab pick-ups. After more than 20 years of advisors extolling the tax virtues of double cab pick-ups, the outcome of the Coca-Cola case is being felt in full force.
Currently those double cab pick-ups with a payload of one tonne or more are classified as a van for the purposes of calculating a benefit in kind.
From 6 April 2025, nearly all double cab pick-ups will be classified as cars when calculating the benefit in kind charge. This is because, typically, these type of vehicles are equally suited to convey both passengers and goods, and do not have a predominant.
It may be that some double cab pick-ups are still considered to be vans, but classification of that would need to be determined by assessing the vehicle at the point it is made available. The assessment will be whether the vehicle construction was primarily for the purpose of conveying goods, rather than passengers. Given the commentary in HMRC’s guidance, this is unlikely to apply to many vehicles, and where there are finely balanced cases, where no predominant suitability can be determined, the default will be that they are considered cars. Therefore, if you are looking to buy or replace a double cab pick-up with a similar vehicle after 5 April 2025 there will likely be a significant increase in the benefit in kind, and consequential increase in the employee’s income tax position. The position for the business will also change.
There are transitional arrangements available for those employers who have already purchased, leased or ordered a double cab pick-up before 6 April 2025. If these apply, then you can rely on the previous tax treatment (i.e. as vans) until the earlier of disposal, lease expiry or 5 April 2029.
By way of an example, the below illustrates how the benefit in kind changes on the same vehicle when it is taxed as a van versus it being taxed as a car (based on the 2024/25 rates and thresholds).
| Van | Car | |
| Vehicle | VW Amarok Aventura | VW Amarok Aventura |
| List Price | £59,403 (incl VAT) | £59,403 (incl VAT) |
| CO2 Emission | 265g/km | 265g/km |
| Van/Car benefit | £3,960 | £21,979 |
| Fuel benefit | £757 | £10,286 |
| Total benefit | £4,717 | £32,265 |
| Tax Cost for basic rate | £943 | £6,453 |
| Tax Cost for higher rate | £1,886 | £12,906 |
| Tax Cost for additional rate | £2,122 | £14,519 |
For a higher rate taxpayer, where a vehicle and fuel are provided for the full tax year, the difference is £11,020 in tax.
It is not just the benefit in kind position that this change in classification will impact. The capital allowances position will follow the employment tax position with HMRC’s guidance confirming that ‘HMRC will no longer interpret the legislation that defines a car for capital allowances purposes as excluding double cab pick-ups with a payload of one tonne or more’. This will mean that most double cab pick-ups will be treated as a car from April 2025 and the rate of relief available for these vehicles will drop from 100% to most likely 6% or 18%, depending on the CO2 emissions of the vehicle.
| Van | Car | |
| Capital Allowance Rate | 100% | 6% / 18% (depending on CO2 emissions) |
Given that the capital allowances treatment is based on when an asset is purchased, transitional arrangements will only apply in instances where the contract for a double cab pick-up is entered into prior to 1 April 2025 (for corporates) and 6 April 2025 (for individuals), and the expenditure is not incurred until after this date (but prior to 1 October 2025). In most cases, however, any vehicles purchased post 31 March 2025 will be subject to the new capital allowances treatment for double cab pick-ups and treated as a car.
The VAT treatment of a double cab pick-up is dependent on the payload of the vehicle, with anything under one tonne classified as a car, and anything more than a tonne as a van. There has been no update to the guidance to suggest that this is changing.
If you are considering replacing your double cab pick-up in the near future, you may wish to consider expediting that prior to 1 April 2025 in order to maintain the current tax efficient benefits.
If you have any queries or concerns about how these changes may impact your business, please do not hesitate to contact either Katie Williams in the employment taxes team, or your usual Hazlewoods contact.
