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If you’ve looked at the commentary following the Autumn Budget, you will have no doubt seen the changes to National Insurance, Capital Gains Tax and Inheritance Tax. However, tucked away in the small print was another significant change set to affect a large number of business owners. Chris George, Tax Partner at Scrutton Bland explores the reclassification of double cab pick-ups and the impact on business owners.
You may have noticed in recent years that vehicles such as the Ford Ranger or Toyota Hilux have become a more common sight on our roads. One of the main reasons for this is that for company car and capital allowance purposes, these vehicles have been treated as vans rather than cars leading to a much more favourable tax treatment for the owned managed business.
In February 2024 the then Conservative government tried to reclassify double cab pick-ups as cars. However, after several weeks of uproar from the agricultural sector and the motor industry they performed a U-turn and confirmed they would remain treated as vans.
But, hidden within the Autumn Budget document was a line confirming that the new Labour government would be pushing through and treating double cab pick-ups as cars moving forward. A change that will have a huge impact on all business owners with these vehicles who are likely to see their annual tax bill rise significantly.
The only consolidation is that there is a ‘soft-landing’ for the new rules coming into effect.
Double cab pick-up tax changes 2024
Firstly, all double cab pick-ups purchased before 1 April 2025 will still qualify as vans under the current rules, meaning they can attract 100% capital allowances through the Annual Investment Allowance. The benefit in kind (BIK) amount is also much lower than the equivalent car.
Secondly, for businesses which have purchased, leased or ordered a double cab pick-up in the period before April 2025 they will still be able to maintain the current benefit in kind rules until either the disposal of that vehicle, the expiry of the lease or 5 April 2029- whichever is the earlier. That means any of these types of vehicles purchased between now and April 2025 will benefit from up to an additional four years under the current rules, before they have to change to the new, more punitive regime.
Let’s look at an example of a typical Ford Ranger and the differences between purchasing before April 2025 and after:
| Pre-April | Post April | Difference | |
| Cost | £35,000 | £35,000 | |
| Year 1
Capital Allowances |
£35,000 | £2,100 | |
| Tax Saving (25%) | £8,750 | £525 | £8,225 |
| BIK | £3,960 | £12,950 | |
| Fuel BIK | £757 | £10,553 | |
| Tax on BIK (40%) | £1,886 | £9,401 | £7,515 |
| Class 1A NIC | £708 | £3,525 | £2,817 |
| TOTAL | £18,557 |
As you can see from the above, the total tax savings achieved by purchasing a new vehicle prior to April 2025 is over £18,500.
So, if you’re currently considering either changing your current double cab pick-up, or buying/leasing a new one, you’ll need to make sure this is done before 1 April 2025 to benefit from the additional four years under the more generous current rules.
What action should you take?
Given the sheer number of these types of vehicles used, I expect there may well be a bit of a rush in the lead up to April 2025 so, getting in sooner rather than later would be advisable to avoid missing out.
For more information on company van taxes for business owners please get in contact with Chris or a member of the Scrutton Bland team by calling 0330 058 6559 or email hello@scruttonbland.co.uk
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