Following discussions with the farming and construction industry, HMRC withdrew these changes on 19th February 2024, meaning the tax treatment Double-Cab Pickups will remain unchanged. We have retained this article as a matter of record.
What Has Changed And Why?
Somewhat quietly, HMRC have announced that from 1st July 2024, they will no longer be using the payload-based categorisation of double-cab pickups as commercial vehicles, and will instead classify them as cars. As to the reason for this change, HMRC state the following: "This is because typically these vehicles are equally suited to convey passengers and goods and have no predominant suitability."
What Are The Tax Implications?
There is some ambiguity so we expect further clarification from HMRC soon, but currently, most double-cab pickups are categorised the same way as vans for tax. This means they qualify as plant and machinery for tax relief, usually resulting in a 100% offset in year one, and they also qualify for fixed-rate van benefits when the vehicles are provided to employees. From 1st July 2024 however, we believe these vehicles will be treated the same way as cars meaning, unless they're electric, they will not be eligible for a 100% tax offset in year one and will instead only be eligible for writing down allowances at the special rate of 6% per year.
Additionally, and arguably more importantly, when provided to employees these vehicles will no longer be eligible for fixed-rate van benefits and will instead attract benefit in kind taxes based on their fuel type and emissions. This will typically be far more costly to both the employer and the employee.
It is not entirely clear what this will mean for the VAT reclaim available on the purchase of these vehicles, although HMRC state "HMRC will no longer interpret the legislation that defines car and van for tax purposes in line with the definitions used for VAT purposes." which would imply that potential VAT claims are unaffected.
What If I Already Own One?
HMRC have also put in place some transitional arrangements which means vehicles purchased before 1st July 2024 or contracts entered before 1st July 2024 (even where the vehicle is received after this date) will be able to rely upon the previous treatment until the earlier of disposal, lease expiry or 5th April 2028.
Nuvo Is Here To Help
If you're unsure whether or not this affects you, our friendly tax team are always here to help. Contact us by calling 01332 299 990 or emailing us at hello@nuvo.co.uk
