New tax shakeup for crew cab pickups

The autumn Budget has dealt a blow to buyers of double-cab pick-up trucks, with the Chancellor of the Exchequer announcing a significant rise in taxes on the popular commercial vehicle.

At the start of the next fiscal year, April 2025, all new crew cab pickups will be reclassified as motor vehicles for tax purposes, dramatically increasing costs for company and business drivers.

The 170-page Autumn Budget document contains very few surprises, but on page 138 there is this text: “The Government will treat double cab pickup trucks (DCPUs) with a payload of one tonne or more as motor vehicles for certain tax purposes. From 1 April 2025 for corporation tax and from 6 April 2025 for income tax, DCPUs will be treated as motor vehicles for the purposes of capital allowances, in-kind allowances and certain deductions from business profits.”

Crew cab pickups are generally considered commercial vehicles if they have a payload of 1,000 kg or more. This gives drivers using them as company cars a lower rate of benefit-in-kind tax, which for the top 20% of taxpayers is around £66 per month. If BIK rates qualify for cars, they will be based on a percentage of the value of the pick-up, meaning a driver using a Ford Ranger Wildtrak 2.0 as a company car would see their £66 monthly tax bill increase to around £300, with this higher rate taxpayer would have to pay £600 a month.

The changes will also affect the rules for calculating capital investments. Crew cab pickups are currently eligible for a full capital rebate, allowing businesses to pay 100% of the cost of their pickup. The new reclassification will place pickups in the same category as passenger cars, reducing the premium to just 18%. Budget changes will also impact a business’s ability to recoup vehicle costs from profits.

Another bright spot is that the Autumn Treasury Budget makes no mention of changing the way double-cab pick-ups are treated for VAT purposes. This means that businesses purchasing double cab pickups with a payload capacity of 1,000kg or more will be able to easily reclaim the VAT element.

This is not the first time the government has tried to make these changes: the previous Conservative government announced similar updates in February 2024, only to do a 180 degree a week later after a vocal backlash from businesses and the farming community.

Although not directly related, changes to the definition of a double cab pickup truck follow the end of a long-running legal battle between Coca-Cola and HMRC.

The presiding judge in the case, Lady Justice Asplin, found that the vehicle must be clearly suitable for the task. In cases where it is unclear whether a vehicle is primarily intended for the transport of goods or people, it should be classified as a motor vehicle.

Before the changes take effect, a transition agreement will be in place to ensure that no current owners or drivers are affected.

Anyone who buys, leases or orders a crew cab pickup truck. until April 6, 2024 will use the current classification until the vehicle is sold or returned to the leasing company. The transition period ends on April 5, 2029.when all those affected will pay new tax rates.

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