New Tax Rules for Double Cab Pick-Up Trucks

The Autumn Budget 2024 has introduced a major change in how double cab pick-up trucks are taxed, with significant implications for businesses and drivers. From April 2025, double cab pick-up trucks with a payload capacity of one tonne or more will be reclassified as passenger cars for tax purposes. This marks the end of their previous classification as light commercial vehicles, which offered more favourable tax treatment.

This reclassification will impact those using double cab pick-ups for business, influencing capital allowances, Benefit-in-Kind (BIK) taxation, and the deductibility of business expenses. Below, we outline these changes, explain their effect on double cab pick-up drivers, and detail the transitional arrangements available to eligible employers.

Key Tax Changes

1. Capital Allowances

Historically, double-cab pick-ups qualified for full capital allowances as commercial vehicles, enabling businesses to claim back a substantial proportion of their value. From April 2025, these vehicles will be treated like cars, meaning:

• Writing-Down Allowances: Only 6% (18% for vehicles with CO2 emissions less than 50g/km) of the vehicle’s cost can be claimed annually as a capital allowance, significantly slowing the rate at which businesses can offset the purchase cost against taxable profits.

2. Benefit-in-Kind (BIK) Taxation

For employees using double-cab pick-ups for personal purposes, the BIK tax rates are set to rise dramatically. Under current rules, these vehicles are treated as light commercial vehicles with a flat-rate BIK charge of £3,960. However, from April 2025, double-cab pick-ups will fall into standard car BIK bands based on CO₂ emissions.

3. Business Expense Deductions

The reclassification will also restrict how businesses can deduct expenses related to double-cab pick-ups. Expenses previously deductible as commercial vehicle costs may now be limited, increasing overall operational costs.

Transitional Arrangements

To ease the transition, the government has introduced measures for vehicles acquired before April 2025:

• Existing Capital Allowances: Double-cab pick-ups purchased before April 2025 can continue benefiting from the current capital allowances rules.
• BIK Rules for Existing Vehicles: Employers can apply the existing BIK rates until the earlier of:
  • The vehicle’s sale.
  • The lease’s end.
  • April 2029.

Implications for Businesses and Individuals

For many businesses, particularly those in construction, agriculture, and small trades, double-cab pick-ups are essential tools. However, these tax changes will:

• Increase Costs: Both for purchasing and operating double-cab pick-ups.
• Alter Vehicle Choices: Businesses may reconsider procurement strategies, opting for vehicles with lower tax implications.
• Require Financial Planning: Companies and employees need to factor these changes into their budgets and tax planning.

What Can You Do?

If you currently use double-cab pick-ups in your business or provide them to employees:

1. Review Your Fleet: Assess whether it’s more cost-effective to purchase vehicles before April 2025 under the existing rules.
2. Seek Professional Advice: Consult with a tax advisor at SMH Group to understand the implications for your specific circumstances.
3. Plan Ahead: Budget for the increased tax liabilities and consider alternative vehicle options if necessary.

For more advice on navigating the complexities of the new tax rules, contact us on 0114 266 4432 or email info@smh.group.