Government U-turn on double cab pickup tax
After just one week the government has u-turned on plans to classify double cab pickup trucks as cars for tax and VAT purposes which would have resulted in huge tax increases.
This U-turn comes after huge criticism from farmers and motoring industry on the plans to classify double cab pickup trucks as cars from 1 July 2024.
The rules will now be reverted to the original guidance issued on 6 April 2022.
Below is a summary of what the government was proposing before announcing their U-turn
From 1 July, HMRC have announced that double cab pickup trucks will be classed as cars for tax and VAT purposes. Currently, any pickup truck that meets the criteria of having a payload of more than 1000kg (or 1045kg with a hardtop installed) is considered a commercial vehicle. This is in line with the current VAT rules, allowing business users to reclaim tax on vans and pick-ups.
From 1 July, HMRC will abandon the payload-based definition and deem any pick-up with a second row of seats as suitable for private use and therefore a car. This is a huge change to benefit-in-kind rules and will mean that company car drivers will face a huge increase in personal tax bills for any such pickup purchased (ordered, leased etc).
Are there any exceptions?
Yes, double cab pick-ups that are permanently modified to make suitable for commercial use by removing the seats and fittings (as well as possibly replacing the rear glass with fibreglass or metal panels) will still be considered as a commercial vehicle.
Transitional arrangements
Transitional arrangements will apply for employers that have purchased, leased, or ordered a double cab pickup before 1 July 2024, whereby they will be able to rely upon the previous treatment until the earlier of disposal, lease expiry, or 5 April 2028. The position prior to 1 July 2024 remains unchanged as outlined at EIM23150.
More from our tax experts
You can find all of our latest tax articles and tax resources here.
If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.
Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.
More similar articles
A guide to inheritance tax planning
What is inheritance tax? Inheritance tax is a levy imposed on the estate of a deceased person before the assets are distributed to their heirs. It is calculated based on the value of a person’s estate (the assets they own as an individual). Above a certain threshold....
Abolition of Furnished Holiday Let Regime
If you own furnished holiday home, you may need to take action before 5 April 2025 due a recent Budget announcement. Capital gains tax on residential property In the Spring Budget, it was announced that the top capital gains tax rate on the sale of residential...
Avoid the £10 Daily Penalty for Self-Assessment
£10 daily penalty for Self-Assessment starts on 1st May Starting from 1st May 2024, individuals who have yet to submit their overdue Self-Assessment tax return for the 2022-23 tax year will incur additional late filing penalties of £10 per day (capped at a total of...