The Government announced in the UK Budget that the tax treatment of so-called “double-cab” pickups will be changing from April.
Previously, these vehicles were treated as vans for tax purposes, meaning that there were generally greater tax reliefs available on them. For example, they were eligible for the Annual Investment Allowance (AIA). This meant that businesses could write off the cost of the pickup in full in the year of purchase against its taxable profits. VAT could also usually be reclaimed on these vehicles and they received favourable benefit-in-kind treatment.
What’s changing?
From 6 April 2025, these vehicles will be treated as cars for tax purposes.
This means that the AIA will no longer be available, and instead relief from corporation tax or income tax will be given at either 18% or 6% per year rather than 100% in the first year. A small company buying a pickup worth £50,000 before 6 April 2025 would have their tax bill reduced by £9,500 in year 1, whereas this will now be spread over at least 5 years, or more depending on the vehicle’s CO2 emissions.
From 6 April 2025, VAT charged on double-cab pickups will be “blocked”, and this means that any VAT-registered business will not be able to reclaim VAT charged on one of these vehicles except for in very limited circumstances.
Finally, double-cab pickups will be subject to the benefit-in-kind rates in the same way as cars, which are determined based on the vehicle’s CO2 emissions. These apply where a business provides a vehicle to an employee for their private use. Unless it is an electric vehicle, these usually result in a very high tax charge.
What can I do?
If you already own a double-cab pickup, or enter into an agreement to buy one on or before 5 April 2025, the old rules will apply until the earlier of lease expiry, disposal or 5 April 2029.
Talking Numbers Accountancy and Bookkeeping can help you to understand what this means for you. Tax doesn’t need to be taxing – we can help you understand your numbers and ensure that you are taking advantage of all available reliefs and allowances. Get in touch today for a free, no-obligation consultation.
