FINANCE
Double cab pickup change will lead to significant tax hike
By HAYLEY KINGSNORTH, PARTNER AT AZETS, Hayley. kingsnorth @ azets. co. uk
From 6 April 2025 double cab pickups( DCPU) are treated as cars, not vans, for benefit in kind( BIK) taxation purposes, as set out in last October’ s Autumn Budget.
This change was initially proposed by the previous government back in February 2024 and due to take effect from July 2024. However, that announcement was quickly reversed on the back of negative reception and industry backlash, and so was shelved.
One of the driving factors behind the change is that HMRC has always had difficulties from a tax perspective with DCPU as they fall right between the middle of the definition of a car( a vehicle primarily used for the carriage of passengers) and the definition of a van( a vehicle primarily suited for carrying goods rather than passengers). This rule change formally brings company double cabs in line with the tax rates for company cars, as many are often used for a mix of commercial and personal reasons.
We anticipate that vehicle and fuel benefit in kind tax will increase by around £ 10,000 for an average DCPU vehicle( based on a Nissan Navara – CO2 169g / km( 37 % BIK)/ list price £ 32k).
It’ s important to point out that there are transitional rules to avoid a‘ cliff edge’ situation for businesses and DCPU drivers. Any double cab vehicles already being used prior to the April 2025 change will continue to benefit from van treatment until the earlier of:
• Disposal or lease expiry
• 5 April 2029
The tax treatment is based on the date any lease agreement is entered into, not the date you take delivery of the vehicle. As an example, if a four-year lease agreement is entered into in February 2025, but the vehicle isn’ t delivered until September 2025, that lease will be viewed as beginning in February, meaning you have four years from that date until the new rules take effect.
An alternative solution could be to consider the electric vehicle options available as they may be a more taxefficient way of providing company vans( and cars) going forward.
Corporation Tax impacts
HMRC also published their plans to change the capital allowance treatment of DCPUs from 6 April 2025 to align with this new BIK treatment, meaning they are now treated as cars not vans for capital allowance purposes as well.
An effect of this is that cars are only eligible for limited Writing Down Allowances instead of tax reliefs such as Annual Investment Allowances or Full Expensing.
We are here to help
If you have any questions relating to the recent changes to the tax rules for DCPU or for other tax advice, please get in touch.
Local Offices: Ashford: 01233 629 255 Canterbury: 01227 454 861 Maidstone: 01622 690 666 Orpington: 01689 827 505 Sandwich: 01304 249 997
www. azets. co. uk
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