It’s been a long and winding road for a final decision on the tax treatment of double cab pick-ups (DCPUs).
Just when it looked as if the question had been settled, Autumn Budget 2024 put it back in the headlines.
Where these vehicles stand as regards the benefit in kind rules and capital allowances has been debated in the courts for some years. The position before the Budget was that DCPUs with a payload of one tonne or more were to be treated as goods vehicles — an announcement made in an abrupt U-turn at the start of 2024.
The Budget announcement resets the position, and revised criteria apply from 1 April 2025 for Corporation Tax (CT) and 6 April 2025 for Income Tax. HMRC will evaluate a vehicle’s ‘primary suitability’ at the time of manufacture to decide whether it should be classed as a car or a goods vehicle. HMRC’s view is that DCPUs are usually equally suited to carry passengers and goods, so there is no ‘predominant’ suitability. Thus most, if not all, DCPUs will be treated as cars.
Transitional provisions soften the immediate impact.
Benefit in kind treatment: Where an employer has purchased, leased or ordered a DCPU before 6 April 2025, the current tax treatment applies until the earlier of: the date the vehicle is disposed of; the date the lease expires; or 5 April 2029.
Examples
- An employer leasing a DCPU on 10 December 2024 falls under the current rules until the earlier of: the date the lease expires or 5 April 2029.
- An employer buying a DCPU on 10 January 2024, and trading it in on 10 April 2025 for another DCPU, falls under the current rules until the date of trade-in. The second DCPU purchased, however, falls under the new rules. It is classed as a car and a car benefit charge will arise.
Capital allowances: Transitional arrangements also apply here. Where expenditure is incurred as a result of a contract entered into before 1 April 2025/6 April 2025, and the expenditure is incurred on or after those dates but before 1 October 2025, the current rules will apply.
Nothing changes as regards VAT. For VAT purposes, DCPUs are classified based on payload. Anything under one tonne is classified as a car, and anything of a tonne or more, as a van.
If you would like to speak with one of our specialist advisers and discuss this further, please email solutions@ellacotts.co.uk or call us on 01295 250401.
* Information for readers: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore, no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.
Business Newsletter – February 2025
