Will tax changes mean the end of the road for the double cab pick-up?

The double cab pick-up has become popular in many industries, particularly in construction and on British farms, often replacing the land rover defender. For many, this is because double cab pick-ups with a payload of more than a tonne have been classified as a commercial vehicle. They have therefore been taxed favourably in terms of capital allowances and employment taxes as company vans.

What are the double cab pickup tax changes?

However, all is about to change. From 6 April 2025, HMRC are amending the legislation and these vehicles will now, in most circumstances, be deemed to be cars. This will in turn immediately remove the favourable tax treatments available.

The previous Government briefly implemented this change before reversing it after industry feedback. The current Government is now planning to reintroduce it.

Benefit in kind for double cab pick-up owners

The change in benefit in kind rules will significantly increase both tax and Class 1A NI.

Benefit in kind arises where companies own double cab pick-ups and a director or employee uses the vehicle privately. Under the current legislation for 2025/26, whilst the vehicles are classified as vans, the benefit arising has been calculated at a flat rate of £4,020 for the vehicle and £769 for fuel. This will lead to a tax liability of £1,915 for a 40% taxpayer.

Under new legislation, classifying these vehicles as cars will increase the benefit in kind. This is because benefit in kind on cars are not calculated using a flat rate. They are calculated on a formula based on the list price of the vehicle when brand new, even if purchased second hand. This is then multiplied by a percentage based on the level of CO2 emissions of the vehicle.

If a van is restricted on private use to only the ordinary commute (home to work travel), then no benefit arose. This is not the same for a company car, where the ordinary commute is classed as private travel and a benefit will arise.

Typically, neither the list price or level of CO2 emission of these trucks are low.

Example: 2025/26 tax liability for a £60,000 double cab pick-up

A £60,000 double cab pick-up with CO2 emissions of over 200g/km would result in a benefit of kind of £22,200. If fuel is provided there will be an additional benefit of £10,434.

The benefit of £22,200 and £10,434 would create a tax liability for a 40% tax payer of £13,053. This would be an increase of £11,138 compared to the current legislation.

In addition to the tax on the employee or director, where a benefit in kind arises the company has to pay Class 1A NI on the value of the benefits at 15%.

In our example, the Class 1A NI due under the current legislation would be £718 and under the new legislation it would increase to £4895.

Capital allowances for a double cab pick-up

Currently, double cab pick-ups with a payload of one tonne or more qualify for annual investment allowance (AIA), reducing taxable profits by 100% of the vehicle’s cost.

From 6 April 2025, HMRC’s reclassification of these vehicles as cars will end AIA eligibility. Businesses will then only be eligible to claim standard capital allowances at 6% due to high CO2 emissions, instead of 100%.

Capital allowances at 6% can then continue to be claimed, on a reducing balance basis, whilst the vehicle is a business asset.

Transitional rules for a double cab pick-up

HMRC has announced transitional rules effective until 6 July 2025. Employers who purchased, leased, or ordered a double cab pick-up before 6 April 2025 can use the previous tax treatment until the earlier of disposal, lease expiry, or 5 April 2029.  Any vehicles purchased after this date will fall under the new rules, potentially resulting in costly mistakes if not properly managed.

Whilst the rate at which qualifying expenditure is relieved is mainly a timing issue, there will be an impact on future tax bills. This will be an important consideration, especially for businesses with tight cashflow and, in particular, where businesses are trading in their business vehicles on which allowances have been claimed.

What will this mean for the future of double cab pick-up sales?

What this will mean for the double cab pick-up sales departments in showrooms across the country is not clear. I suggest a busy few months up to the end of March 2025 whilst people look to take advantage of the current rules. However, thereafter could this see the end of the road for the double cab pick-up on the roads?

It would seem likely that the pick-up landscape will change if a sensible alternative vehicle can be purchased that continues to meet the definition of a commercial vehicle.  Care is needed in this area, as more generally whether a vehicle is a van for tax purposes and what counts as a car, is receiving increasing attention from HMRC at the moment.

More generally, the dividing line between a van and a car for tax purposes is not a simple one. Something might look like a van, but that doesn’t mean that HMRC will count it as a van, or that the case law would support it being a van. Essentially, even if a vehicle looks like a van and is used like a van, if it has seats behind the driver, or the capability to have seats fitted behind the driver, it will not be counted as a van for benefit in kind purposes and will instead be treated as a car.  The legislation considers what the primary purpose of the vehicle is – to carry goods (van) or to carry people (car).

As shown above with double cab pick-ups, the tax implications of this are considerable with a massive differential between the treatment of the vehicles.

For many industries, the choice could be to go electric with a mere 3% benefit in kind charge from April 2025. At present, industry press suggests that there is only one electric pick-up on the market and there are few signs of others arriving soon.

Get in touch with our experts for advice on double cab pick-ups and other vehicle tax implications.