- HMRC says double cab pickups are cars not vans
- New tax classification runs from 01 July 2024
- Wipes out tax advantage of a double cab as a company car
- Transition period for current leases on double cabs
DOUBLE cab pickups have been popular with small businesses and SMEs, not to mention the odd property developer. With good reason.
Double cab pickups have a cabin with four doors and an extra row of seats ahead of a shorter load bed, so can easily carry five adults. And often feature high-end specifications.
Because of a particular tax break, in recent years they’ve taken off as an alternative to a family hatchback or an SUV as a company car thanks to very low company car taxation because they are classed as vans.
They can be a bit bouncy to drive, but plenty of people like the rugged style, high driving position and load-lugging capability of double cabs, which also often have four-wheel drive. They can be as basic or as luxurious as you like, and many people add a hardtop.
The Ford Ranger, Isuzu D-Max, Volkswagen Amarok and Toyota Hilux are household names. In fact many double cab pickups go to supermarkets more than farmyards or brickyards.
But if you are eying a big double cab pickup as your next company car, the new benefit in kind tax rules change on 1 July 2024, so they will no longer be classed as commercial vehicles.
“After rumblings for some time, there has been a decision around double cab pickups and BiK. I am sure this will have some big impacts on the market.”
Under the HMRC tax rules to July 2024, so long as you chose a pickup with a payload of at least 1,000kg it classified this as a Light Commercial Vehicle, which meant that it attracted a lower BiK for personal use and if you were VAT-registered you could reclaim some of the VAT. A two-door pick up has always been classed as LCV-only because it is more suitable just as a working vehicle.
Pickup BiK is charged at a flat rate of £792 for a 20% taxpayer or £1,584 a year at 40%, no matter what the purchase price or model. For example, a £30,899 Isuzu D-Max DL20 1.9 4×4 Double Cab at £792/£1,584 BiK currently compares to a £29,075 Kia Sportage 1.6T GDi 157 SUV at £1,977/£3,954 a year.
From 1 July 2024, HMRC will no longer interpret the legislation that defines car and van for tax purposes in line with the definitions used for VAT purposes. This VAT approach for double cab pickups differentiated based on payload, with anything under one tonne (1,000kg) classified as a car, and anything a tonne and over as a van.
When a double cab is classed the same way as a car the snag will be that as BiK is charged as a percentage of the purchase price and related to the CO2 emissions of a vehicle, heavy large-engined pickups won’t do well.
What Will The Double Cab Tax Changes Mean To Me?
There’s no need to panic if you purchased, leased, drive or ordered a double cab pickup before 1 July 2024. HMRC has a transitional arrangement so these people will be able to rely upon the previous rules until the ‘earlier of disposal, lease expiry, or 5 April 2028’. Here’s the explanation of the new rules on GOV.UK.
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