Buried within the Autumn Budget 2024 were important tax changes for double cab pick-ups: from 6th April 2025, these vehicles will be classified as cars for capital allowances and Benefit-in-kind (BIK) purposes. This change will have a notable impact on tax treatment for businesses and employees who use these vehicles.
Key Tax Treatment Changes Effective April 2025
- New Classification: Starting on 6th April 2025, double cab pick-ups will be treated as cars for capital allowances and BIK purposes.
- Grandfathering Provisions: Those who acquire double cab pick-ups before April 2025 will continue to benefit from the existing tax treatment. Transitional BIK arrangements will allow employers who have purchased, leased, or ordered a double cab pick-up before this date to continue with the current tax treatment. This treatment will apply until the vehicle is disposed of, the lease expires, or until 5th April 2029—whichever comes first.
Impact on Taxable Benefits
Currently, double cab pick-ups do not give rise to a taxable benefit where private use is insignificant. However, under the new classification as a car, a taxable benefit will arise if the vehicle is available for any level of private use, regardless of how minimal it may be. By the 2029/30 tax year, this reclassification could result in a benefit charge of up to 39% of the vehicle’s list price for private use.
Increased Tax Liabilities for Employees and Employers
Employees and directors with private access to double cab pick-ups will see a change in their tax obligations. The taxable benefit will be added to their income and taxed at their marginal rate. Employers, meanwhile, will be responsible for Class 1A National Insurance at 15% on the value of the benefit, plus additional costs if private fuel is provided.
VAT Treatment Remains Unchanged
It is important to note that there is no change to the VAT treatment of double cab pick-ups. Vehicles with a payload of 1 tonne or more will continue to be classified as goods vehicles for VAT purposes, allowing VAT to be reclaimed under the usual rules.
Planning Ahead: Act Before April 2025
For those considering the acquisition of a new double cab pick-up, completing the purchase before April 2025 will allow businesses to retain the current, more favourable tax treatment.
If you have questions about how these changes may affect your tax planning, feel free to reach out to our team for guidance on the best approach to managing these upcoming tax adjustments.