Double Cab Pickup Changes – Act now!

In the Autumn budget HMRC revealed changes to the interpretation on how a double cab pickup should be classified for benefit purposes. This change will come into effect from 6 April 2025.

What is classified as a double cab pickup?

HMRC class a double cab pickup as normally having:

• A row of seats behind the driver and is capable of seating in the region of four passengers in addition to the driver
• Four doors which can be opened independently; and
• Uncovered pickup area behind the passenger cab.

What are the changes?

Previously a double cab pickup would be treated as a van for benefit-in-kind purposes if it had a payload of 1,000kg or more. Treating a double cab pickup as a van was important for tax purposes as the benefit-in-kind is significantly lower compared to a car.

From 6 April 2025, this test will no longer apply and will instead require the employer to identify the construction of the vehicle in the relevant tax year and then to consider whether the construction is primarily suited for the conveyance of goods. HMRC expects that most double cab pickups will fall under this definition of a car because these vehicles are equally suited to convey passengers and goods and therefore have no predominant suitability.

Transition arrangements for P11D purposes

For existing double cab pickup drivers, HMRC have agreed that there will be a transition period in place to protect the current benefit-in-kind position.

If an employee is using a double-cab pickup truck that has been purchased, leased or ordered before 6 April 2025 by the employer, then they will still be able to treat these vehicles (with a payload of more than 1,000kg) as a van benefit until the earlier of disposal, lease expiry or 5 April 2029.

Income tax – capital allowances

For purchases after 6 April 2025, the double-cab pickup must also be assessed on the suitability test and not the payload, again resulting in most double-cab pickups be classified as cars.

This will mean that the business will no longer be able to claim the 100% Annual Investment Allowance and instead the capital allowances available will be based on the vehicle’s CO2 emissions.

Company tax – capital allowances

 For purchases after 1 April 2025 the double cab pickup must also be assessed on suitability and not payload. Similarly to the income tax, the annual investment allowance will not be able to be claimed.

VAT

However, there are currently no changes to the VAT treatment of double cab pick-ups. If the payload is 1,000kg or more then VAT can be reclaimed by the business.

If you have any questions or would like to discuss further, please contact your local Perrys branch.