Budget announces another U-turn on double cab pickups

Buried deep in the Budget report was the information that from April 2025 the government will treat double cab pickup vehicles with a payload of one tonne or more as cars for certain tax purposes.  Currently these vehicles are accepted as vans.

The previous government had attempted to bring this change in earlier in the year but spectacularly reversed the decision a week later following a backlash from many sectors. Yet here we go again as the new government look to bring the change back in.

With effect from 1 April 2025 for corporation tax and from 6 April 2025 for benefit in kind purposes double cab pickups will be treated as cars for the purposes of capital allowances, benefits in kind, and some deductions from business profits.

The existing capital allowance treatment will apply to those vehicles purchased before April 2025. There will be transitional arrangements in place regarding the benefit in kind position for employers that have purchased, leased or ordered a double cab pickup before 6 April 2025 as they will be able to use the previous treatment of these vehicles, until the earlier of the disposal, lease expiry or 5 April 2029.

The revisit in the tax interpretation of these type of vehicles follows on from the Court of Appeal judgement in Payne & Ors (Coca-Cola) v R & C Commr (2020) BTC19. This ruling established that to qualify as a van, it will need to satisfy the construction and primary suitability tests within Section 115 ITEPA 2003. That is, it is a vehicle of a construction primarily suited for the conveyance of goods or burden of any description.

Therefore, it will be expected that from 6 April 2025 most double cab pickups will not satisfy this test as the vehicles are multi-purposes, that is equally suited to conveying passengers and goods.

There has been a significant tax advantage for employer and employees in choosing a double cab pickup as your company vehicle when compared to a traditional company car.

Going forward this will undoubtably increase the taxable benefit position for those employees who choose to retain or have a double cab pickup meaning there will be an increase in their income tax liability.

For the employer it will mean an increase in the Class 1A national insurance contributions (NIC) due on the benefit provided, which will also be at a higher rate due to the employer NIC increase announced in the budget.