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New Pick-Up Rules: VAT Stays the Same!
Many customers are unsure how the new rules from 6th April 2025 affect business vehicle purchases. To clarify, we’ve put together this quick guide.
New Benefit In Kind (BIK) Legislation
From 6th April 2025, double cab and extra cab pick-ups will be classified as cars rather than commercial vehicles for BIK purposes. What does this mean?
- Currently, double cab and extra cab pick-ups are taxed at a flat £3,960 BIK rate.
- Under the new rules, they will be taxed according to the car BIK rate, which varies between 2% and 37% depending on the vehicle’s CO2 emissions.
Why The Change?
HMRC has concluded that double cab and extra cab pick-ups are equally suited for transporting both passengers and goods, meaning they do not demonstrate predominant commercial suitability. As a result, they will now be classified as company cars for capital allowances, benefits in kind, and certain business tax deductions.
Capital Allowances (CA)
Capital allowances allow businesses to deduct some or all of a vehicle’s value from profits before tax.
- From 1st April 2025, double cab and extra cab pick-ups will be classified as company cars for CA purposes.
- They will no longer qualify for the previous classification and will instead be subject to company car rates, which range between 6%, 18%, and 100% depending on the vehicle’s CO2 emissions.
Transitional Period
Are you a current owner or will you purchase, lease, or order a double cab or extra cab pick-up before 6th April 2025?
HMRC has introduced a transitional period during which vehicles acquired before this date will continue to follow the existing tax treatment. This will last until the earlier of:
- The vehicle’s disposal
- Lease expiry
- 5th April 2029
Single Cabs
You may have noticed that only double cab and extra cab pick-ups are affected. That’s because single cabs remain unaffected by these changes - HMRC has ruled that they demonstrate a clear predominant commercial use.
What Happens After 6th April 2025?
For customers using double cab and extra cab pick-ups as company cars, the new tax rules will apply to all vehicles purchased, leased, or ordered from 6th April 2025 onwards.
VAT Reclaiming
The VAT treatment of double cab and extra cab pick-ups remains unchanged.
- All double cab or extra cab pick-ups with a payload over 1 tonne will still qualify for VAT reclaims, provided the purchasing business is VAT-registered.
Still Unsure? Contact Truckman
We understand these changes may be confusing, and every customer has different circumstances. If you’re still unsure about how these rules apply to you, feel free to contact Truckman - we’re happy to help!
