The beginning of the end for Double Cab Pick Up Trucks

For some people, double cab pick-ups (DCPUs) as a company car offer a great combination of strong utilitarian vehicles, which can also cope with the demands of family life. For many years the VAT rules permitted DCPUs to be treated as vans rather than cars for VAT purposes where, broadly, they have a useful payload (carrying capacity) of at least 1 ton. For consistency, HMRC also applied for both Capital Allowances and employment benefits.

In February 2024, HMRC changed their manuals to reflect a victory in the Court of Appeal in 2020, and announced that DCPUs would be treated as cars from July onwards. There was an outcry and the policy was reversed within days.

Now we notice that the fine print of the Budget contained a comment that ‘double cab pick-ups’ [DCPU] with a payload of one tonne or more will be treated as cars for capital allowances, benefits in kind, and some deductions from business profits. As those who drive these rather individual vehicles will know, the benefit in kind rules as they apply to cars and vans/ DCPUs are significantly different, with the tax on cars potentially amounting to a quadrupling or more of tax bills for affected individuals.

The budget document stated that HMRC will apply the new treatment from 1 April 2025, (for Corporation Tax) and 6 April 2025 (for Income Tax). For vehicles purchased before this date, the existing capital allowances treatment will still apply. So there may be a limited opportunity to purchase under existing rules. There will be some transitional benefit in kind rules where employers have purchased, leased, or ordered their vehicle before 6 April 2025, which will let them use the previous treatment until the earliest of disposal, lease expiry, or 5 April 2029.

This change of heart will come as disappointment to some in the farming and construction communities and if the measure comes through unscathed, we will probably see less of these vehicles on our road in the future.