Are double cab pick-up private vehicles or are they commercial? That was the question when the government first announced that double cabs would be treated as company cars for benefit-in-kind and capital allowances.
After a massive backlash, the previous government changed its mind not long after the announcement last February.
But the new government u-turned the u-turn. As a result, double cab pick-up vehicles will no longer be classed as commercial vehicles from April 2025. And that means a big tax hike!
HMRC says it has an issue from a tax perspective about double cab pick-ups. That’s because they fall between what is defined as a car (vehicles used primarily to carry passengers) and a van. Vans are classed as being primarily suited to carrying goods.
But because many double cab pick-ups are used for a mix of personal and commercial reasons, they argued they should be brought into line with cars.
Anyone who buys a pick-up that only has two seats, however, will not need to worry about the changes. They will continue to be classed as commercials.
How double cab pick-up taxes will rise
The current treatment for double cab pick-up taxes is the same as a van. That means their flat annual scale charges are low. At the moment, it is £3,960 for the van and £757 for any private fuel provided. But benefit-in-kind charges for company cars are based on CO2 emissions with a sliding scale of charges.
Under the new classification, double cab pick-ups will be classed as a car. Even if the vehicle is used little for private journeys, the benefit charge could reach 39% of the list price.
Income tax will be payable by the employee or director on the benefit-in-kind at the marginal rate of income tax. Employers will become liable to pay Class 1 A National Insurance at 15% on the value of the benefit. That includes the fuel benefit, if fuel is provided for private use.
A P11D form must be used to report the benefits for the 2024/2025 and 2025/2026 tax years. From 6 April 2026, benefit reporting will be completed through PAYE.
What about VAT?
The VAT you pay when buying a double cab pick-up won’t change. As long as the vehicle has a payload of more than 1 tonne, it will be classed as a goods vehicle for VAT purposes.
How do the new taxes compare?
To illustrate how the new taxes will compare, we have chosen a Toyota Hi-Lux Invincible X at £43,000+VAT. It used for incidental private use and fuel is provided by the employer. The person is a high rate taxpayer in this example.
| Under current rules | Under new rules | |
| Value of car benefit | £0 | £17,760 |
| Value of fuel benefit | £0 | £10,434 |
| Income tax payable by employee | £0 | £11,278 |
| Class 1A NIC Payable by Employer | £0 | £4,229 |
| Total tax cost annually | £0 | £15,507 |
Transitional arrangements
There are transitional arrangements in place to ensure you aren’t hit with high taxes on a vehicle you currently own or have ordered. Any double cab pick-ups being used or ordered before the change on 6 April 2025 will still be classed as a van. But that will change once:
- It is disposed of or the lease expires
- The date of 5 April 2029 is reached
What to do next
Do you currently lease a double cab pick-up and the lease is due to expire in a year or two? If so, you could find out whether a new lease can be arranged ahead of the 6 April 2025. This would mean your vehicle is classed as van until April 2029 under the transitional arrangement rules.
Anyone who is thinking about adding a double cab pick-up to their fleet should look to finalise their lease or purchase agreement before the start of the 2025/26 tax year.
You don’t have to receive the vehicle until after the start of the tax year, as the new rules are based on when you entered the lease agreement.
If you are unsure about the new rules or would like more advice about company vehicles, contact our team today.
