You may have recently read, or remembered from the 2024 Autumn Budget, that double cab pick-ups will be treated differently for tax purposes from April 2025, which will affect many businesses and individuals.
What is changing?
Under the current rules, double cab pick-ups are treated as commercial vehicles for tax purposes, making them an attractive option for businesses due to their lower benefit-in-kind tax rates and favourable capital allowances.
However, double cab pick-ups acquired on or after 1 April 2025 (6 April 2025 for a sole trader) will be treated as cars for both benefit-in-kind and capital allowance purposes. This will increase the tax payable for businesses and sole traders.
Transitional benefit-in-kind arrangements will apply for employers that have purchased, leased, or ordered a double cab pick-up before 6 April 2025. In this case, they will be able to use the previous treatment, until the earlier of disposal, lease expiry, or 5 April 2029.
It is also important to note that there is no change to the VAT treatment of double cab pick-ups.
Example
For example, the UK’s most popular double cab pick-up is the Ford Ranger, with a list price of around £60,000 and CO2 emissions of just over 200g/km.
Under the old rules, the benefit-in-kind payable would be £4,020. However, under the new rules, the benefit-in-kind payable will be £22,200. This will result in a significant increase in tax of £18,180.
For capital allowances, under the old rules, the Ford Ranger would qualify for Annual Investment Allowance (AIA) at 100%, which would therefore reduce the taxable profits by £60,000.
However, under the new rules, the Ford Ranger will be treated within the special rate pool, with Written Down Allowance (WDA) relief at 6%. This would amount to a reduction in taxable profits of only £3,600.
Hopefully this brief gives you an introduction to the new rules and the key issues to consider.
If you have any questions please do not hesitate to contact us on 01494 358853.