Double Cab Pickup Tax Hike April 2025

Double Cab Pickup Tax Hike April 2025

Following the Autumn Budget 2024, it has been officially announced that, starting in April 2025, double cab pickup trucks will be classified as company cars for tax purposes. As a result, all double cab pickups with a payload of at least one tonne will be taxed as cars rather than commercial vehicles. This shift is expected to increase costs (BIK tax and capital allowance) for companies and drivers, impacting those that depend on these vehicles for daily operations and commercial use.

What Is Benefit-in-Kind (BIK) Tax?

Benefit-in-Kind (BIK) tax is a tax on non-cash benefits provided by employers to employees or directors, such as company cars, private health insurance, or accommodation. These benefits are considered part of their compensation package and are taxed accordingly, similar to a salary. Various factors impact the BIK tax rate, but this is definitely something worth considering when choosing a vehicle.

The goal of BIK is to ensure that employees pay tax on the full value of their compensation, including both cash earnings and non-cash perks. Employers report these benefits, and employees are taxed based on the assessed value.

What Is Capital Allowance?

Capital allowance is a tax relief available to businesses on qualifying capital expenditure, such as the purchase of equipment, machinery, or vehicles. Instead of deducting the full cost of an asset in the year of purchase, businesses can claim a portion of the cost each year over several years. This helps to reduce taxable profits and lower tax liabilities.

In the UK, the majority of cars have a capital allowances rate of 18% per year. Cars emitting over 110g/km may fall into a different rate, typically 6%. Meanwhile, commercial vehicles, like vans, generally qualify for 100% capital allowances in the year of purchase.

Volkswagen Amarok Pickup Truck

What Will This Tax Change Mean?

Currently, double cab pickups are typically classified as commercial vehicles if their payload is at least 1,000kg. In the UK, the BIK rate for commercial vehicles, is set at a flat rate rather than a percentage based on CO2 emissions like company cars. However, with the upcoming alignment of BIK rates to those of standard cars, double cab pickup truck owners could experience a tax increase of up to 236%. Given that majority of these pickups feature larger diesel engines, the adjustment will result in a significant number being subject to the highest BIK rate of 37% due to high CO2 emissions and the pickup’s P11D value.

The reclassification will impact capital allowance rules as well. Currently, double cab pickups qualify for full capital allowances, letting businesses claim 100% tax relief in the first year. Under the new rules, this will reduce to just 18% on a writing-down basis. Additionally, the budget changes will restrict businesses' ability to deduct vehicle expenses from profits, adding to the financial pressure on companies that depend on these vehicles.

Both employees and company directors using double cab pickups for both business and personal uses will face increased BIK rates. Additionally, companies who buy or decide to lease a double cab pickup from 6th April 2025, will no longer benefit from the substantial capital allowances currently available. On the contrary, single cab pickups, extended cab pickups, and other commercial vehicles will continue to enjoy their existing tax benefits, remaining unchanged by the new regulations.

It’s worth noting that, under transitional rules, double cab pickups leased, purchased or ordered before 6th April 2025 for BIK purposes (1st April 2025 for capital allowance) will continue to be classified as commercial vehicles. This classification will remain in place until one of the following occurs: the pickup truck is disposed of, the pickup lease agreement ends (if applicable), or until 5th April 2029, whichever comes first.

The Future of Pickup Trucks

Despite these tax changes, we believe the demand for these popular vehicles will somewhat continue. As pickup trucks offer unmatched versatility, durability, and practicality, they have often been a preferred choice for many. The ability to transport heavy loads, navigate tough terrains, and provide ample space makes them indispensable for various industries.

However, the upcoming tax changes could have a broader impact on manufacturers. Currently, in the UK, some pickups such as the KGM Musso are only available in double cab versions. But we think manufacturers may start focusing more on alternative configurations like single cab versions. As businesses seek more cost-effective options, there might be a growing trend towards more single cab pickups and other commercial vehicles which will retain more favourable capital allowance and BIK tax rates. Only time will tell though – what are your thoughts?

Ford Ranger Pickup

Lease A Pickup Truck Now

By taking action now and leasing a pickup truck, customers can benefit from the existing BIK rate. They can also make use of existing capital allowances for commercial vehicles. Under the transitional rules, getting a pickup truck before the deadline ensures it can keep being classed as a commercial vehicle until 5th April 2029.

A pickup truck lease offers businesses and individuals a flexible and cost-effective option without the long-term commitment of ownership. It allows you to access a new commercial vehicle with lower upfront costs and fixed monthly payments.

So, if you’re searching for pickup lease deals, contact GB Vehicle Leasing today to discuss your options and find the perfect vehicle for your needs. Our team is here to guide you through the process and whether you’re looking for a reliable Isuzu D-Max lease or a high spec Ford Ranger Wildtrak, we’re here to help.

About The Author: Charlotte Kennedy

Charlotte joined the GB Vehicle Leasing team around 6 years ago starting out as an apprentice and is now being a key member of our marketing team.

Find Out More About Charlotte

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