What’s the effect of HMRC’s U-turn on the double cab pick-up tax?

What’s the effect of HMRC’s U-turn on the double cab pick-up tax?

By Published On: 27 June 2024Categories: Sole Trader, Tax

As a business owner you may need certain vehicles in order to complete your work, specifically crew cab vehicles. Currently these types of vehicles are classed as vans rather than cars for national insurance and income tax purposes, but over the past few years the crew cab vehicle has been the topic of many court cases and discussions, whereby HMRC have challenged the classification of what actually constitutes a van. 

In this blog we take a closer look at what’s happened, and what you need to know as a current or future crew cab owner. 

Classification of the crew cab vehicle 

When a vehicle’s sole purpose is the carrying of goods, it is classed as a ‘goods’ vehicle, and a double cab pick-up is classed as a van if it has a payload capacity of one tonne or more. Any less in weight and it would be classed as a car.

What was going to change? 

Back in February 2024 HMRC released new information on how for Benefit in Kind (BiK) purposes, double cab pick-ups with a payload of 1 tonne or more will be treated as cars rather than goods vehicles from July 1st 2024.  

These new rules were due to apply to all double cab pick-ups ordered after 1st July 2024, and any vehicles already purchased will still be subject to the previous classification up until April 2028. 

HMRC does a huge U-turn 

The farming and motor industry was in uproar about the new policy along with negative feedback from the Society of Motor Manufacturers and Traders (SMMT), and as a result the government decided to withdraw the new policy little over a week after it was announced. HMRC posted their updated guidance on February 19th, and concluded that their proposed changes would have too great an impact on businesses and individuals which ultimately do not align with the government’s wider aims.  

Therefore, all double cab pick-ups will be treated as goods vehicles rather than cars moving forward, and businesses can continue to benefit from the previous tax treatment. 

How much tax can you expect to pay? 

For the tax year 2024/25 vans that have been provided to employees for their own private use will be subject to a flat rate Benefit in Kind (BiK) of £3,960 or £0 if the vehicle is zero emissions. These rates are set until the end of the 2025/26 tax year. Also a separate van fuel charge applies if the employer covers the whole cost of fuel for private journeys. This is set at £757 for 2024/25, which will then be subject to tax for both the employee and the employer.  

How Vantage Accounting can help 

It’s no surprise that the U-turn will be a huge relief for many, especially those who work within the farming and construction industries. But should you need any further guidance on tax when purchasing a work vehicle, or any form of tax for that matter, the tax specialists here at Vantage Accounting can help. Get in touch today to find out more about how we can help you. 

Note: All the information and advice in this blog post was correct at the time of writing.

Share this article

Go to Top