In a detail overshadowed by major Budget headlines, a recent announcement brings tax implications for businesses with double cab pickups.  

Starting from April 2025, these vehicles, previously benefiting from commercial vehicle tax rates, will now be treated as company cars if they meet specific payload requirements.  

This reclassification will raise the benefit-in-kind (BIK) tax owed by both employers and employees. 

Under the new rules, double cab pickups with a payload of one tonne or more will face the same tax treatment as company cars.  

This affects capital allowances, Income Tax, National Insurance contributions (NICs), and several business deductions, increasing the tax burden on businesses. 

The rationale behind reclassification 

For years, vehicle classification has sparked debate, particularly regarding pickups and small commercial vehicles often used for both personal and business purposes.  

HM Revenue & Customs (HMRC) introduced this change to bring clarity and consistency to the tax treatment of double cab pickups primarily used for work.  

Going forward, they will no longer benefit from the favourable tax treatment reserved for commercial vans. 

What the new tax treatment means for double cab pickups 

Benefit-in-kind tax  

Currently, double cab pickups are taxed at a fixed BIK rate of £3,960.  

Under the reclassification, BIK will depend on CO2 emissions and list price, potentially adding thousands to employees’ tax bills. 

Capital allowances  

From April 2025, double cab pickups will also be treated as cars for capital allowance purposes, meaning businesses may see reduced deductions due to the restrictive capital allowance rates applied to cars. 

National Insurance contributions  

With the higher BIK values, employers will face increased NICs, adding to the overall expense of providing double cab pickups as company vehicles. 

Fuel benefit costs  

The reclassification will affect fuel benefit costs, as the new treatment applies car fuel benefit rates rather than the more favourable van rates, increasing costs for businesses that provide fuel for employees. 

Who is affected and when? 

The new tax treatment will apply to all double cab pickups acquired from April 2025.  

However, businesses with pickups purchased, leased, or ordered before 6 April 2025 can benefit from transitional arrangements, which allow the old tax treatment until either the vehicle’s disposal, lease expiry, or 5 April 2029.  

This relief offers a buffer period for existing vehicles, allowing some flexibility in adapting to the new rules. 

For those planning vehicle purchases, completing them before April 2025 could provide substantial tax advantages, given the more favourable existing treatment. 

What steps businesses can take now 

• Review fleet composition – Evaluate the cost-effectiveness of keeping double cab pickups in your fleet, as other vehicle types may offer a more favourable tax position under the revised rules. 

• Communicate with employees – Inform affected employees of the upcoming tax changes to help them prepare for potential increases in their personal tax contributions. 

• Plan for transitional relief – If your business currently owns or leases double cab pickups, confirm eligibility for transitional relief to alleviate some of the financial impact over the next few years. 

• Reassess fuel policies – With higher fuel benefit costs expected, reviewing your policies may help minimise expenses if your business provides fuel benefits to employees. 

If you have any questions or need further assistance with understanding how these changes affect your business, feel free to reach out for guidance.