Changes have been announced on how double cab pickups are taxed. From yesterday (12 February 2024), HM Revenues & Customs (HMRC) has updated its internal Employment Income Manual, which details changes to BiK and capital allowances.
Currently, HMRC uses the VAT approach where payload is used to define whether a double cab pickup is taxed as a car or as a van. Under the VAT rules, any double cab pickups with a payload under one tonne are classified as a car and anything over one tonne is classified as a van.
From 1 July 2024, HMRC will categorise vehicles based on whether the vehicle is most suitable for conveying passengers or goods. Typically, double cab pickups are equally suited to convey passengers and goods. Effectively, this will mean that “most if not all double cab pickups will be classified as cars when calculating the benefit charge” (from HMRC manual). What this means is that the Benefit in Kind charge will become higher, resulting in higher income tax and national insurance payments.
Transitional arrangements will apply for employers that have purchased, leased, or ordered a double cab pickup before 1 July 2024. The previous treatment will apply until the earlier of disposal, lease expiry, or 5 April 2028. HMRC have given four very useful examples of how the transitional arrangements will work, detailing the treatment in different scenarios.
Broadly, vans have a lower Benefit in Kind tax charge than cars, and as such, the change in tax treatment is expected to have a big impact on the market.
The transition period, phase-in and grand-fathering are all measures that BVRLA has actively encouraged HMRC to introduce, if a change had to take place, so this at least is good news.
The capital allowances regime has also changed. Details are available on the gov.uk website and here.
All members should collaborate with their customers to they understand the change. Email [email protected] with any questions.
See the BVRLA’s guidance sheet: Company van and fuel taxation.
