Say Goodbye to Double Cab Pick-ups…
Following the Autumn budget, double cab pick-ups are going to be classified as cars for tax purposes from April 2025.
In February 2024 the government looked to treat double cab pick-ups as cars, after a backlash from the farming and motor industry they reversed that decision. However, the new Labour government have decided to continue with the reclassification.
What’s Changing?
Previously, double cab pickups like the Ford Ranger, Toyota Hilux, and Mitsubishi L200 were classified vans.
Vans are commercial vehicles and therefore attract 100% capital allowance tax write off in the year of purchase.
Also, if they are used personally they are classified as vans for the benefit in kind (BIK). The BIK paid by employees and directors will rise by thousands of pounds a year. Currently all pick-ups are subject to a fixed benefit of £3,960, with a 40% taxpayer paying £1,584, and a 20% taxpayer paying £792 per year.
A double cab pick-up, with a list price of around £48,000 and CO2 emissions of more than 170g/km, would be in the 37% bracket meaning BIK of around £17,700 a year, leading to employee tax of £7,110 a year for a 40% taxpayer or £3,550 a year for a 20% taxpayer, a significant increase.
Key Impacts of the Reclassification:
Corporation tax write off goes from 100% in the first year down to 6% per annum.
Personal tax increase of thousands for employees and directors with personal use.
When is it changing?
The change comes into place from 6 April 2025.
If you currently own, or purchase a double cab pick-up before 6 April 2025, the old rules will still be in place until 5 April 2029.
If you were thinking of buying a double cab pick-up, or will need to replace one in the next year, doing so before 5 April 2025 will have significant tax advantages.
Many construction businesses, builders, landscapers, and tradespeople use double cab pickups as versatile, everyday workhorses. Reclassification will create a financial strain on smaller operators who might now face a hike in running costs without the commercial vehicle incentives that previously offset these expenses.
Some may even consider downsizing or switching to vans or other vehicles that still qualify as vans to maintain those benefits.
Please contact us here for advice on this topic if you believe this will impact you.
To book a call to see how we can help your construction business please click here.
