HMRC U-turn on double cab pickup tax hike

HMRC U-turn on double cab pickup tax hike

The Government announced on 12 February 2024 that it would be changing the tax treatment of double cab pickups purchased, leased or ordered from 1 July. However, following widespread concern, particularly from the agriculture and motor industries, the change has now been withdrawn.

With a General Election on the cards for this year, it’s no real surprise that the Government has decided to backtrack given the substantial criticism of the proposed update. What is a surprise is that it’s been reversed only one week after it was announced – leading to questions on whether any consultation or analysis was undertaken before the alteration was put forward.

What would the change have meant?

The tax treatment of vans and cars are significantly different. When the change was set to come into force and double cab pickups were to be classed as cars instead in many cases, there was to be a substantial uplift in the amount of benefit in kind (BiK) owed by the average tax payer (40% rate). We’ve set out an example below:

The example is based upon a Nissan Navara, with CO2 emissions of 169g/km and a list price of £32,000.

There was also due to be an impact on the capital allowances relief available. As with BiK, double cab pickups were to be treated as cars opposed to vans. This would have resulted in them only being eligible for limited Writing Down Allowances instead of valuable tax reliefs such as Annual Investment Allowances of Full Expensing.

The changes were dependent on suitability tests, as set out in the high profile Coca Cola v HMRC 2020 court case. If the primary purpose couldn’t be determined as being for the transportation of goods as opposed to being primarily for the conveyance of passengers, the vehicle would have been treated as a car.

The reversal will likely be welcome news for many, and it’s good to see that the Government has taken industry concern into account.

We are here to help

If you have any questions in relation to the reversal or would like to discuss the current tax treatment of double cab pickups, please get in touch with your usual Azets advisor or a member of our specialist Employment Tax team.