Pick-up trucks set to be taxed like cars from July

For drivers eyeing up the enticing tax advantages of double-cab pick-ups for company use, it's time to act fast. HMRC is shaking up the classification of these vehicles, rebranding them as passenger cars starting from the 1st July 2024, which will lead to a big increase in taxes.

Double-cab pick-ups have always sat in a grey area between commercial vehicles and passenger cars. Until now, HMRC considered any pick-up capable of carrying a payload of one tonne or more as a working truck, enjoying favourable tax perks.

Under the current rules, drivers using these as company vehicles pay a fixed Benefit in Kind rate of £3,960. This translates to a monthly tax bill of £66 for a 20% taxpayer and £132 for someone in the 40% tax bracket.

However, from July, HMRC will view double-cab pick-ups differently, deeming them as cars due to their lack of a primarily commercial function. This change will significantly impact tax bills, with drivers facing a substantial increase.

But don't worry if you've already ordered your vehicle. The changes only apply to vehicles ordered after the 1st July 2024. Those with confirmed orders or existing leases will continue under the current tax rules until the vehicle is replaced, the lease ends, or by the 5th April 2028. After that, all vehicles will be subject to the new regulations.

The catalyst for this change stems from a legal dispute between Coca-Cola and HMRC regarding dual-use vehicles. The court's ruling emphasised the necessity for a vehicle to be clearly suited to one task or another, rather than hovering on a narrow margin. Lady Justice Asplin highlighted that a vehicle must be primarily suited for a specific purpose, not just marginally so.

As double-cab pick-ups lack a clear primary commercial function, they will now fall under the car category for tax purposes. However, this change won't affect vehicle excise duty rates for commercial vehicles, which will remain at £325 per year.

It's worth noting that this change only impacts those using pick-ups as company cars. Private buyers and companies with genuine pool vehicles won't face this Benefit in Kind burden.

And don't forget, if you're interested in leasing a pick-up for personal use, you still have that option available.