Reclassification of Double-Cab Pickups

Starting from April 2025, significant tax changes will affect businesses that purchase double-cab pickup trucks. Here is a concise overview:

Reclassification of Double-Cab Pickups

Current Status (Before April 2025):

Double-cab pickups with a payload of one tonne or more are classified as commercial vehicles. This classification provides tax benefits, including favourable Benefit-in-Kind

(BIK) rates and capital allowances.

New Status (From April 2025):

These vehicles will be reclassified as passenger cars for tax purposes. This change impacts several areas:

• Benefit-in-Kind (BIK): Currently, double-cab pickups are subject

to a flat BIK rate. From April 6, 2025, BIK rates will be based on

the vehicle's CO₂ emissions and list price, similar to passenger

cars. This reclassification is expected to result in higher BIK

charges for employees using these vehicles for personal use.

• Capital Allowances: For corporation tax purposes, effective from

April 1, 2025, double-cab pickups will be treated as cars. This

means businesses will no longer be able to claim the same capital

allowances as they did when these vehicles were classified as

commercial vehicles.

Transitional Arrangements

To ease the transition, the government has introduced the following provisions:

• Eligibility: Businesses that purchase, lease, or order a double-cab pickup

before April 6, 2025, can continue to apply the current tax treatment.

• Duration: This transitional treatment remains valid until the earliest of

the following:

-Disposal of the vehicle

-Expiration of the lease

-April 5, 2029

This means that eligible vehicles can retain their commercial vehicle tax benefits for up to four additional years.

Impact on Businesses

These changes will likely lead to increased tax liabilities for businesses and employees utilizing double-cab pickups. It's advisable for businesses to review their vehicle acquisition plans and consider purchasing or leasing double-cab pickups before the April 2025 deadline to take advantage of the transitional arrangements.

For any questions regarding this topic please contact me andrew@rhaccountants.com