HMRC Reverses Decision on Double Cab Pickups Tax Classification

Last week, HM Revenue & Customs (HMRC) made waves with its proposal to reclassify double cab pickups with a payload of one tonne or more as cars rather than vans for tax purposes. However, following feedback from farmers and motor industry experts regarding the potential negative impact on their businesses, HMRC has decided to backtrack on this proposal.

This means that double cab pickups with a payload of one tonne or more will continue to be treated as vans for tax purposes. HMRC is now aiming to introduce legislation to solidify this classification, ensuring that these vehicles remain categorised as goods vehicles for tax purposes. The government plans to consult on this draft legislation, which is expected to be included in the next Finance Bill.

So, what does this mean for businesses? Well, the benefit in kind treatment for employers providing double cab pickups to employees will remain unchanged. Additionally, the capital allowances available in the first year of use for businesses purchasing these vehicles will not be reduced.

To clarify, double cab pickups are classified based on their payloads. Anything under one tonne is considered a car, while anything weighing one tonne or more is classified as a van. This aligns with the definitions used for VAT and capital allowances purposes.

Currently, the benefit in kind for a van available for private use is set at an annual standard value. For the 2023/24 tax year, this rate stands at £3,960. If fuel for private travel is also provided, an additional standard value of £757 must be reported for the tax year. However, these amounts can be reduced if the van is not available to the employee for 30 consecutive days or more, or if the employee pays for private use.

The decision by HMRC to withdraw the proposed change will likely be met with relief by many employers who either provide or plan to provide double cab pickups to their employees. It also comes as good news for industries reliant on these vehicles, which may have faced adverse effects from a potential decline in purchases and increased tax burdens.

Need help?

If you have questions about HMRC legislation or benefits in kind, please get in touch with your usual contact, call 0330 024 0888 or email enquiry@larking-gowen.co.uk.

Duncan Saxby