Double-Cab Pickups Reclassified: Major Tax Changes Coming in April 2025

(Posted on 18/12/24)

The 2025 Autumn Budget, announced just a few weeks ago, introduced several impactful changes, including the reclassification of double-cab pickups for tax purposes. Previously treated as light commercial vehicles, these pickups will now be classified as standard passenger cars. This change imposes significantly higher tax obligations on businesses and employees who use these vehicles, raising serious concerns across industries. The decision has already sparked debate, many question its fairness and foresee challenges in adapting to the new financial burdens.

After April 1st, 2025:

• Double-cab pickups with a payload capacity of one tonne or more will be reclassified as passenger cars for Corporation Tax purposes.

After April 6th, 2025:

• The same will apply for Benefit-in-Kind (BIK) taxation and profit deductions, meaning double-cab pickups will be taxed as passenger cars for these purposes as well.

The previous government initially announced these changes to take effect in 2024, but after facing significant backlash, they quickly reversed their decision just a week later. However, it has now been confirmed that these changes will indeed be implemented, but not until April 2025. 

Starting on April 1st of that year, double cab pickups will be reclassified as passenger cars for Corporation Tax purposes. Furthermore, as of April 6th, double cab pickups will also fall under the same classification for Benefit in Kind (BIK) and profit deductions for income tax. 

This means that from April 2025, businesses will only be able to claim capital allowances for double-cab pickups under the light commercial vehicle classification if they were purchased or ordered before the deadline of April 1st, 2025. Any pickups ordered or purchased after this date will be subject to the passenger car capital allowance rules, which offer significantly less favorable tax benefits.

HMRC announced that any Benefit-in-Kind (BIK) arrangements for individuals who have already purchased or ordered double cab pick-ups before April 2025 will continue to be taxed under the current regulations. This will remain in effect for the duration of the vehicle lease or until the vehicle is disposed of, or by April 5th, 2029, whichever comes first. This provides some flexibility for businesses to manage the transition and adapt to the new regulation.

This change is set to have a significant impact on those who rely on double-cab pickups for commercial purposes, such as farming, construction, and self-employment. The reclassification aims to address what has been perceived as a tax loophole for double-cab vehicles. However, it raises serious concerns for businesses and individuals who depend on these vehicles as essential tools for their livelihood.

Double-cab pickups have long been a staple for businesses and individuals, valued for their practicality and versatility. They have become a popular choice across various industries, serving as everyday workhorses for small businesses and essential vehicles in sectors such as construction and agriculture. However, with recent changes, the cost of running a double-cab pickup is expected to significantly increase.

This financial strain is already being felt in the market, as evidenced by the sharp decline in light commercial vehicle (LCV) registrations in November. In fact, pickup registrations dropped by 20.4% to just 3,012 units. This trend suggests that the impending changes, set to take full effect in April 2025, are already having a major impact on the market. While the market for pickups has been experiencing a gradual decline, the budget announcement appears to have accelerated this downward trend. (SMMT statistics)

So, if you look at this for those paying BIK, they will see a significant rise. Looking at one of the most popular double cab pickups in the UK, the Ford Ranger, has listed CO2 emissions of over 221 g/km. This puts it in the 37% tax bracket, resulting in a Benefit-in-Kind (BIK) cost of approximately £5,876.93 per year for a 40% taxpayer, or about £489.74 per month.

You will still have time to order a double-cab pickup to avoid being classified as a light commercial vehicle. If you need any more information or advice, just get in touch—we are always happy to help.

Relevant Articles:

https://www.fleetsauce.co.uk/news/government-scraps-pickup-tax-changes/177

https://www.fleetsauce.co.uk/news/double-cab-pickups-will-be-classed-as-a-company-car-from-july-2024/171