In a significant turn of events, the UK Government has reversed its decision regarding the classification of double cab pickups, following widespread pressure from the farming and motoring industries.
This update is crucial for businesses and individuals alike who rely on these vehicles for their daily operations.
Reversal of the HMRC Double Cab Pickup Decision
Initially, HM Revenue & Customs (HMRC) declared that starting from 1 July 2024, double cab pickups would be classified as cars rather than vans for benefits in kind (BiK) purposes.
However, in a welcome change of policy, this decision has been overturned. According to the latest guidance from HMRC, double cab pickups will continue to be recognised as vans for both income tax and capital allowance purposes.
What This Means for You
- Income Tax: The existing rules for double cab pickups remain unchanged. If a double cab pickup is used solely for commuting and business journeys, it will not be subject to any Benefit in Kind. This maintains the favorable tax position these vehicles previously enjoyed, ensuring they remain an efficient choice for business use.
- Capital Allowances: Businesses can breathe a sigh of relief as they will not be required to put any new vehicles in the special rate tax pool and a business should now be able to claim full tax relief for the vehicle in the year of purchase.
What Was HMRC’s Initial Decision?
The original announcement stated that double cab pickups would be treated as cars for tax purposes. This change was set to impact both the Benefit in Kind tax costs for employees and directors and the capital allowance claims businesses could make.
Specifically, vehicles with CO2 emissions of 160g/km or higher were facing a greater burdensome tax regime, and the allowances for these vehicles were to be significantly restricted.
The original rules stipulated a clear distinction in tax treatment between cars and vans, affecting not only the immediate tax costs but also the timing and method of claiming tax relief. The move to classify double cab pickups as cars was expected to bring a substantial shift in their tax treatment, especially concerning capital allowances where the benefits were to be delayed significantly.
For any questions or further clarification, please do not hesitate to contact either Paul or Martin in our tax team via tax@ryans-uk.com.