Double Cab Pickup Truck HMRC Update: What Does It Mean?
So, the bad news is that HMRC will be treating Double Cab Pickup Trucks as cars from July 1st 2024, this is regardless of payload capacity. As a result, there are both employment tax (benefit In kind) and capital allowance changes – neither of which are good.
On the plus side, you still have until July 1st to take delivery of, or order your new Isuzu Pickup Truck from Tanners with no immediate tax impact.
From Farmers to Builders, the Self-Employed to Market Traders, we all love our Pickups and have benefited from preferential tax rates since 1999; however all good things must come to an end. The new changes take place on July 1st 2024 which now categorise your beloved Pickup Truck as a car.
If you currently own a Pickup, the new legislation may influence your renewal or when you sell your current vehicle. To help you decide we have summarised the information below…
1. Impact on Employment Tax
For double cab pickups purchased, leased, or ordered prior to 1st July 2024, the previous rules remain. These vehicles will continue to be treated as vans for employment tax purposes until disposal, lease expiry or 5th April 2028. From 5th April 2028 onwards, the benefit in kind (BIK) on individuals will transition from a van BIK to a car BIK, which will likely result in higher tax charges.
So get down to Tanners before July 1st to take delivery of, or order your new Isuzu Pickup Truck before the new rules come into force.
2. Eployer Treatment of Changes (examples taken from HMRC)
Example 1
Employer A purchased a double cab pickup on 14th September 2024. As this purchase is post 1st July 2024, the vehicle would be classified as a car, and a car benefit charge would arise. So new tax treatment applies.
Example 2
Employer B leased a double cab pickup on 10th April 2024. As this was leased before 1 July 2024, the previous rules continue to apply for Employer B until the earlier of the lease expiry, or 5th April 2028. So no immediate tax treatment change.
Example 3
Employer C purchased a double cab pickup on 10th July 2023. This was subsequently traded in on 1st November 2024 for another double cab pickup. The previous rules apply to the first vehicle until the trade in point on 1st November 2024. As the new double cab pickup was purchased after 1st July 2024, it will represent a car under the new rules, and a car benefit charge would arise.
Example 4
Employer D placed an order for a double cab pickup on 5th January 2024, but this was not available to the employer until 2nd September 2024. As the agreement was entered into before 1st July 2024, the previous rules continue to apply for Employer D until the earlier of disposal, lease expiry, or 5th April 2028.
3. Impact on Individual Tax
The benefit in kind (BIK) calculations for vans and cars are different. The BIK for the provision of a van and fuel are based on flat rate amounts that are set by HMRC each tax year. For 2024/25, the van BIK is £3,960 and the van fuel BIK is £757. The flat rate amount for a fully electric van is £0. The BIK for the provision of a car and fuel are based on the vehicle’s CO2 emissions. The higher the CO2 emissions of the vehicle, the higher the BIK multiplier percentage. The BIK multiplier percentage for 2024/25 ranges from 2% for 0g/km cars to 37% for 160g/km + over cars. For the car BIK, the multiplier is applied to the list price of the vehicle. The list price is the price of the vehicle when new and does not consider any discounts. Added extra’s will also be included at full value. For the fuel BIK, the multiplier is applied to a flat-rate fuel amount that is set by HMRC each tax year. For 2024/25 the flat rate fuel amount is £27,800.
What Is The Increased Tax For Me?
An Isuzu D-Max DL40 double cab pickup under the van BIK rules for 2024/25 will result in a BIK of £3,960. If fuel is supplied, then there will be an extra BIK of £757. The same vehicle under the car BIK rules (from July 1st) will result in a BIK of £14,553. This is based on a list price of £39,334 (inc VAT) and CO2 emissions of 220g/km which generate a multiplier of 37%. If fuel is supplied, then there will be an extra BIK of £10,286.
The van and fuel BIK totals £4,717 whereas the car and fuel BIK totals £24,839. This is clearly a significant additional tax for the Employee. An individual pays tax at 20%, 40% or 45%, depending on their income. As a result, these changes could have a significant impact on employee tax, so Tanners recommend discussing with your Tax Advisor to ensure the implications are fully understood.
Impact on VAT
HMRC have not amended the definition of a van for VAT purposes. A van for VAT purposes continues to be a vehicle with a payload over one tonne. The VAT on purchase of a van can be reclaimed if it is supplied to a VAT registered business and it is used for the purposes of their business. If the intended use of the van is for private purposes, then the full amount of VAT incurred would not be reclaimable and it would need to be apportioned.
Effect on Capital Allowances
HMRC have not commented on the effect of this classification for capital allowance purposes. The definition for capital allowances follows that of employment tax and therefore, it would be expected that HMRC will consider double cab pickups as cars for capital allowance purposes from 1st July 2024. The effect of this is that a capital allowance claim will be restricted from 100% relief in the year of purchase to 6% relief every year.
At Tanners we anticipate high demand across the Isuzu range of double cab pickup trucks in advance of the new tax treatment.