The Autumn Budget 2024 put the tax treatment of double cab pick-ups (DCPUs) back in the headlines.
Background
For benefit-in-kind rules and capital allowances, the classification of these vehicles has been debated in the courts for some years. The position before the Budget was that DCPUs with a payload of one tonne or more were to be treated as goods vehicles.
Last autumn’s Budget announcement resets the position, and revised criteria apply from:
– 1 April 2025 for Corporation Tax (CT) and
– 6 April 2025 for Income Tax.
HMRC will evaluate a vehicle’s ‘primary suitability’ at the time of manufacture to decide whether it should be classed as a car or a goods vehicle.
HMRC’s view is that DCPUs are usually equally suited to carry passengers and goods, so there is no ‘predominant’ suitability. Therefore most, if not all, DCPUs will be treated as cars.
Transition
To soften the immediate impact, these transitional provisions can be used:
Benefit in kind treatment Where an employer has purchased, leased or ordered a DCPU before 6 April 2025, the current tax treatment applies until the earlier of:
– the date the vehicle is disposed of;
– the date the lease expires;
– or 5 April 2029.
Examples
• An employer leasing a DCPU on 10 December 2024 falls under the current rules until the earlier of: the date the lease expires or 5 April 2029.
• An employer buying a DCPU on 10 January 2024, and trading it in on 10 April 2025 for another DCPU, falls under the current rules until the date of trade-in. The second DCPU purchased, however, falls under the new rules. It is classed as a car and a car benefit charge will arise.
Capital allowances Transitional arrangements also apply here. Where expenditure is incurred as a result of a contract entered into before 1 April 2025/6 April 2025, and the expenditure is incurred on or after those dates but before 1 October 2025, the current rules will apply.
VAT
Nothing changes as regards VAT. For VAT purposes, DCPUs are classified based on payload. Anything under one tonne is classified as a car, and anything of a tonne or more, as a van.
Contact
Please talk to us for further information or advice on any aspect of business motoring.