Double Cab Pick-Ups Reclassified as Cars for Tax Purposes Starting April 2025

Following the Autumn Budget 2024, double cab pick-up (DCPU) vehicles will be reclassified as cars for tax purposes. This reverses a prior decision made in February 2024 after strong opposition from the motor industry.

Some crew cab vehicles have traditionally been classified as ‘vans’ rather than ‘cars’ for income tax and national insurance purposes. This classification has led to ongoing discussions and legal disputes with HMRC over the definition of a ‘van.’

In early 2024, the government initially decided to treat DCPUs as company cars, but concerns raised by the farming and motoring sectors led to a policy reversal.

New Tax Classification in the Autumn Budget 2024

As announced in the Autumn Budget, “The government will treat double cab pick-up vehicles (DCPUs) with a payload of one tonne or more as cars for certain tax purposes. From 1 April 2025 for Corporation Tax, and 6 April 2025 for income tax, DCPUs will be treated as cars for the purposes of capital allowances, benefits in kind, and some deductions from business profits.”

What Are the Upcoming Changes?

Starting 1 April 2025 for Corporation Tax and 6 April 2025 for income tax, DCPUs with a payload of one tonne or more will be treated as cars for capital allowances, benefits in kind (BIK), and some business profit deductions. This shift will result in a higher BIK tax liability for drivers, depending on the vehicle specifications.

For DCPUs purchased before April 2025, the current capital allowance rules will continue to apply.

Additionally, transitional BIK arrangements will be available for employers who purchase, lease, or order a DCPU before 6 April 2025. This allows them to retain the previous tax treatment until the earlier of the vehicle’s disposal, lease expiration, or 5 April 2029.

Recommendations for Businesses

For businesses in construction, agriculture, and other industries relying on pick-ups, it’s advisable to review current fleets and assess the impact of these upcoming changes.

As the new regulations won’t take effect until April 2025, we recommend that clients consider replacing existing vehicles with DCPUs or entering new DCPU leases before the end of the qualifying period to maximise favourable tax treatment for up to four additional years.

Should you require any further detail on the changes or how they may impact you,  please drop us a message