Double Cab Pick Ups; round the ‘not so’ merry go round
Christine Courtman · Posted on: November 13th 2024 · read
The much anticipated first Labour budget in 14 years was delivered by Rachel Reeves on 30th October and the headline news on Inheritance Tax and National Insurance changes quickly spread. However, one of the lesser-known amendments u-turned a previous decision on the classification of double-cab pickups for income and corporation tax purposes.
Many small business owners, including those in the agriculture and construction industries, benefit from the current rules associated with Double Cab Pickups, these been the classification as a ‘commercial vehicle’ which has resulted in improved tax reliefs for capital allowances and reduced tax cost for benefits in kind.
Earlier in the year there was a major decision to change the taxation of double cab pick-ups, reclassifying them as ‘cars’ for tax purposes, but was almost immediately reversed after much uproar. However, slipping into the Autumn budget, an objection from the Court of appeal has had this ruling overturned once again.
The impact is that as of 01 April 2025 for Corporation Tax and 06 April 2025 for income tax, double cab pick-ups with a pay load of 1 tonne or more will no longer get favourable tax rates and instead fall under the same rules as cars, which are much more restrictive. Gone will be the days of 100% relief in the year of acquisition and instead, writing down allowances at a rate of 18% per annum will be claimed. Imagine spending £30,000 on a double-cab pickup; currently the entire £30,000 would be relievable against your taxable profits, however as of the new tax year, you can only claim £5,400 relief, being 18% of cost. This will result is an acceleration of tax on your profits
Whilst the change hasn’t affected the VAT position of these vehicles, it will certainly not be a welcome decision for many.
HMRC guidance has been issued confirming that as long as a contract to purchase the vehicle is signed pre-April 2025 and paid for by 30th September 2025 then the current rules will still apply, assuming the vehicle has been brought into use by this point. Whilst there has been no communication on hire purchase contracts specifically, we would assume, until told otherwise, that this would follow the treatment above.
If you are considering capital expenditure and think you will need a new commercial vehicle in the coming months, it may be beneficial to do so earlier than later.
Whilst there has been no communication on hire purchase contracts specifically, we would assume, until told otherwise, that this would follow the treatment above.
