Double Cab Pick Ups U-Turn by HMRC

HMRC announced on 12 February 2024 that Double Cab Pick Ups with a payload of one tonne or more purchased after 1 July 2024 would be treated as cars for capital allowances and benefit in kind purposes rather than as goods vehicles.  This would have resulted in significantly higher tax bills for both businesses and employees.

From a capital allowances perspective vehicles which are not considered to be cars  will usually attract a 100% Annual Investment Allowance resulting in a deduction  for the full cost of the vehicle from trade profits in the year of purchase.  Cars generally attract a lower rate of capital allowances of either 18% or 6% depending on the CO2 emissions of the vehicle.

When calculating benefits in kind commercial vehicles are taxed at a flat rate, whereas cars are taxed according to their ‘list price’ and CO2 emissions.  The tax bill on a double cab pick-up with a payload of one tonne or more would therefore potentially have been much higher if it was considered to be a car rather than a commercial vehicle.

However, following substantial backlash from both farmers and the motoring industry, HMRC reversed this decision and withdrew their new guidance on these vehicles.

Double Cab Pick Ups with a payload of one tonne or more will therefore continue to be treated as commercial vehicles for both capital allowances and benefit in kind purposes. Double Cab Pick Ups with a payload of less than one tonne will continue to be treated as cars for both capital allowances and benefit in kind purposes.

The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.

Photo by Michael Brannaka on Unsplash