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Double Cab Pick Up rules made clear
28th February 2024
Double Cab Pick Ups (DCPUs) will continue to be treated as goods vehicles rather than cars, allowing businesses to continue to benefit from the existing tax treatment.
This relates to DCPUs with a payload of one tonne or more. DCPUs with a payload of less than one tonne continue to be treated as cars.
HMRC confirmed the tax position, having previously said it was going to change its guidance from 1 July 2024 following a 2020 Court of Appeal judgment, that DCPUs with a payload of one tonne or more would be treated as cars rather than goods vehicles for both capital allowances and benefit-in-kind purposes.
The Court of Appeal ruled that most multi-purpose vehicles, such as DCPUs are cars in Payne & Ors (Coca-Cola) v R & C Commrs (2020) (BTC19).
However, following pressure from business groups particularly in the farming, automotive and construction industries, it has now been decided to leave things as they are.
And the government has now said it will consult on draft legislation to ensure clarity in the rules before including it in the next Finance Bill.
Nigel Huddleston, Financial Secretary to the Treasury, said:
“We will change the law at the next available Finance Bill in order to avoid tax outcomes that could inadvertently harm farmers, van drivers and the UK’s economy.”
Implications
The tax on the benefit-in-kind will now not increase when employers provide these vehicles to their employees; and the capital allowances available in the first year of use will now not be reduced when a business purchases this vehicle for use in their trade.
This will ensure a continued generous and consistent treatment of DCPUs with a payload of one tonne or more for capital allowances, benefit in kind, and VAT purposes.
Whilst company cars are taxed according to their list price and CO2 emissions, vans are taxed on a flat rate scale that is normally lower then taxable value. In addition, there is no benefit in kind charge where a van has insignificant private use.
Vans also normally qualify for 100% Annual Investment Allowance, or the 100% full expensing relief if it is new and purchased by a company.
Further information
See HMRC's internal guidance
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