Tax, all change for double-cab pickups
There is a key difference in the way cars and vans are treated for tax purposes in the UK, affecting areas such as benefit in kind calculations and capital allowances. Typically, vans receive more favourable tax treatment than cars.
However, not all vehicles fit neatly into either category, particularly those that blur the line between private and commercial use, such as double-cab pickup trucks.
HMRC has recently updated its guidance on how double-cab pickups should be classified for tax purposes, with significant implications from 6 April 2025 onwards.
We asked our Saihuj in our private client tax team to share with us an outline of the previous position on double-cab pickups, the revised rules and the transitional arrangements that may apply.
Previous classification of double-cab pickups (trucks)
These vehicles typically have:
- A passenger cab which contains a second row of seats, so in total this vehicle can accommodate four passengers plus the driver;
- Four doors which can be opened independently
- An uncovered pickup area behind the passenger cab
Since 6 April 2002, the tax treatment for these vehicles was in line with the VAT definition of a van, which is that if a vehicle has a payload of 1,000kg (one ton), then this vehicle should be treated as a van.
This ‘test’ has now been deemed as inconsistent with the Court of Appeal’s decision in Payne v HMRC (2020) (otherwise known as the ‘Coca-Cola’ case), whereby it was concluded that double-cap pickup trucks are not primarily suited for the conveyance of goods and that there is nothing about these vehicles which renders them unsuitable for private use.
Revised HMRC Guidance on double-cab pickups
From 6 April 2025, HMRC have updated the guidance surrounding double-cab pickups and state that the default position of these vehicle is that they should be classified as cars rather than vans, for the following purposes:
- Benefit in kind
- The benefit in kind tax charge for cars will be based on the vehicles list price and carbon emissions rather than the flat rate of £3,960 for vans. This could result in higher tax liabilities for taxpayers using these vehicles.
- Capital allowances
- Companies will no longer be able to claim the AIA on these vehicles, and instead they will be subject to writing down allowances of 18% or 6%, unless the double-cab pickup truck is purchased new and has 0g/km emissions.
For taxpayers, HMRC’s revised guidance is disadvantageous, and to help ease this adjustment, HMRC have implemented new transitional rules.
Transitional Rules for double-cab pickups
Benefit in kind
Transitional arrangements relating to benefits in kind, apply for employers who have ordered or leased a double-cab pickup truck prior to 6 April 2025, whereby they will be able to rely upon the ‘old’ treatment and classify these vehicles as vans, until the earliest of:
- disposal;
- lease expiry; or
- 5 April 2029
Example
Company A purchases a new double-cab pickup truck on 1 February 2025. As this date is prior to 6 April 2025, the old rules are still in place and this vehicle is classified as a van (for benefits in kind), up until the earlier of its disposal or 5 April 2029.
Company B purchases a new double-cab pickup truck on 1 June 2025. As this date falls within the new rules, this will be classified as a car and a car benefit in kind will arise.
Capital Allowances on double-cab pickups
New capital allowances guidance states that double-cab pickup trucks purchased or leased before 1 April 2025 (Corporation Tax) or 6 April 2025 (income tax) will not be classified as a car for capital allowances purposes.
The transitional arrangements for capital allowances are slightly different compared to the benefit in kind rules above. Where an amount of expenditure is incurred on a double-cab pickup truck before 1 (or 6) April 2025 and any further expenditure is incurred on or after that date but before 1 October 2025, the vehicle will not be treated as a car.
Expenditure incurred on or after 1 October 2025 will be treated as expenditure on the hire of a car, regardless of when the hire contract was entered into, and so the hiring expense will be subject to the usual restriction
Example
Company C signs the contract and pays a deposit for a new double-cab pickup truck on 1 March 2025. The company picks up the vehicle and pays the outstanding amount on 1 June 2025.
As the subsequent expenditure was incurred before 1 October 2025, this vehicle would be classified as a van rather than a car.
This is because the contract was signed prior to 1 April 2025, even though the subsequent expenditure was incurred after this date, so the old rules are still in place.
However, if the subsequent payment was made on 1 November 2025, then as this falls after 1 October 2025, this subsequent payment would be treated as purchase of a car for capital allowances, regardless of when the contract was signed.
The revised rules around double-cab pickups are nuanced and may be easily misunderstood, especially with the shift in classification and transitional provisions. Ensuring the correct treatment is crucial to avoid errors in tax returns.
If you would like to speak to Saijuj, or any member of our private client tax team about company car tax or indeed taxation on double-cab pickups, please contact us on 020 7870 9050 or email us at hello@rpgcc.co.uk. A member of the RPGCC is waiting to help.
