A few months ago we wrote about a bizarre situation where HMRC announced the reclassification of Double Cab Pick-ups as Cars rather than Commercial Vehicles, only to reverse the announcement a week later – see Double Cab Pick-ups – Changes Announced and Withdrawn. The rumour was the rural vote was not happy about this, and thus politics won in the run up to a General Election.
Well, in Autumn Budget 2024 the change is back on.
“Following a Court of Appeal judgement, the government will treat double cab pick-up vehicles (DCPUs) with a payload of one tonne or more as cars for certain tax purposes. From 1 April 2025 for Corporation Tax, and 6 April 2025 for income tax, DCPUs will be treated as cars for the purposes of capital allowances, benefits in kind, and some deductions from business profits. The existing capital allowances treatment will apply to those who purchase DCPUs before April 2025. Transitional benefit in kind arrangements will apply for employers that have purchased, leased, or ordered a DCPU before 6 April 2025. They will be able to use the previous treatment, until the earlier of disposal, lease expiry, or 5 April 2029.” (Section 5.91 Budget Papers)
What does this mean:
- VAT, apparently no change, existing rules apply – a commercial vehicle is defined in the negative as a vehicle which is not a car (VIT50300 – Motoring expenses: what is a car?) – most Double Cab Pick-ups have a payload of over a tonne
- Capital Allowances – all businesses – will now be by reference to emissions, and 100% AIA won’t be allowable
- If a Double Cab Pickup is supplied to an employee, including a company director, Benefits in Kind will apply for both Income Tax and Class 1A NI at Car Rates – ie the Double Cab Pickup is treated as a car
- Sole Traders, Partnerships – in practice no difference to apportionment of motoring costs