The government’s Autumn Budget has introduced a key change that could significantly affect businesses and individuals using double-cab pick-up trucks. Starting April 2025, these vehicles—if they have a payload of one tonne or more—will be reclassified as passenger cars for tax purposes.
This move marks a major shift from their current treatment as light commercial vehicles and brings with it a range of tax and National Insurance implications for both employers and employees.
Key Dates and What’s Changing
- 1 April 2025: For Corporation Tax, double-cab pick-ups will be treated as passenger cars.
- As of 6 April 2025, the new classification will affect Benefit-in-Kind (BIK) and allowable business deductions for Income Tax purposes.
Currently, double-cab pick-ups benefit from a fixed BIK rate (around £3,960 annually). But from April 2025, BIK will be calculated under the passenger car rules, often resulting in higher tax bills for users.
Capital Allowances and Business Deductions
The reclassification will also alter how businesses can claim capital allowances:
- Before April 2025: Double cab pick-ups still qualify for the more generous allowances under commercial vehicle rules.
- From April 2025: These vehicles will follow the less favorable passenger car rules, potentially affecting cash flow and reducing tax efficiency.
Transitional Relief for Existing Vehicles
HMRC is offering a transition period to ease the shift:
- Existing double-cab pick-ups can be taxed as commercial vehicles until the earlier of:
- Disposal or sale of the vehicle
- Lease ending
- 5 April 2029
This gives businesses some breathing room to adapt and plan for the future.
What Should Businesses Do Now?
If your business uses or plans to acquire double-cab pick-ups, now’s the time to act:
- Review your current fleet: Determine which vehicles qualify for transitional relief.
- Reconsider future purchases: Factor in the new tax treatment post-April 2025.
- Talk to a professional: Understanding the full impact on your business requires expert advice.
How DMC Accounting Ltd Can Help
At DMC Accounting Ltd, we’re here to support you through these changes. Whether it’s strategic tax planning, vehicle investment advice, or cash flow forecasting, our team is ready to help you stay compliant and financially optimized.
Get in touch with us today to discuss how these upcoming changes could affect your business, and what you can do to stay ahead.