From April 2025, double cab pickup trucks in the UK will be reclassified as cars for tax purposes, marking a significant shift for business owners and fleet operators. This change, confirmed in the Autumn Budget 2024, will impact capital allowances, Benefit-in-Kind (BIK) tax, and business expense deductions.

Previously treated as commercial vehicles, double cab pickups will now fall under the same tax regulations as company cars, increasing the financial burden for businesses using these vehicles.

What’s Changing?

Under the current system, double cab pickups are classified based on payload capacity—if they can carry over one tonne (1,000 kg), they are considered vans for tax purposes. However, from April 2025, this method of classification will no longer apply to capital allowances or BIK tax calculations.

Instead, HMRC will assess these vehicles based on their construction, considering their suitability for both passenger transport and cargo. As a result, most double cab pickups will be classified as cars for tax purposes, leading to higher tax rates and reduced financial benefits for businesses.

However, VAT rules remain unchanged. Businesses can still reclaim VAT on double cab pickups with a one-tonne payload or more, as they will continue to be treated as commercial goods vehicles for VAT purposes.

Transitional Arrangements for Businesses

The government has introduced a grace period for businesses that purchase, lease, or order a double cab pickup before April 2025. These vehicles will continue to be treated as commercial vehicles for tax purposes until:

• They are sold
• The lease expires
• April 5, 2029, whichever comes first

Similarly, for capital allowances, if a business orders a double cab pickup before April 2025 and incurs the cost before October 1, 2025, it will still qualify for commercial vehicle tax treatment.

Impact on Benefit-in-Kind (BIK) Tax and Company Fleets

The change in classification will have a major impact on Benefit-in-Kind (BIK) tax, which applies to company vehicles provided to employees.

Currently, vans are subject to a flat BIK rate of £3,960 per year (2024-25). However, company cars are taxed on a sliding scale based on CO2 emissions, meaning higher-emission pickups will face significantly higher BIK costs.

For example, under the new tax rules, a Ford Ranger, priced at around £47,000 and emitting over 170g/km of CO2, would be taxed at 37% BIK rate, resulting in an annual taxable value of £17,390. This means:

• A 40% taxpayer would owe £6,956 per year
• A 20% taxpayer would owe £3,478 per year

This represents a substantial increase compared to the current flat-rate van tax, making double cab pickups less attractive as company vehicles.

Previous HMRC U-Turn on Pickup Tax Rules

This is not the first time the government has attempted to reclassify double cab pickups. In February 2024, HMRC announced plans to change the tax treatment from July 2024. However, just one week later, the decision was reversed, citing concerns that it would disproportionately impact businesses and individuals.

Now, the government has moved forward with the April 2025 implementation, despite opposition from motoring and business groups.

Industry Concerns and Business Response

Motoring and industry groups have raised concerns about the financial burden these changes will place on businesses, particularly in sectors that rely heavily on pickups, such as construction, agriculture, and rural industries.

The Countryside Alliance has estimated that these changes could increase tax costs on a standard double cab pickup by up to 211%, making it much more expensive for businesses to operate these vehicles.

How Businesses May Respond

With the upcoming tax increases, businesses may consider alternative vehicle choices, such as:

• Switching to standard vans, which retain lower BIK rates and capital allowances.
• Adopting electric vehicles (EVs), which offer lower tax rates due to their zero-emission status.
• Exploring alternative financing options to offset the higher cost of company pickup taxation.

The April 2025 tax changes for double cab pickups mark a major shift in how these vehicles are classified and taxed. While businesses have a transition period to adapt, the long-term financial implications could make pickups a less attractive option for fleets.

With higher BIK taxes, increased employer National Insurance contributions, and reduced capital allowances, many companies may reconsider their fleet strategy before the new rules take effect.

For businesses that depend on double cab pickups, careful planning and reviewing alternative vehicle options will be crucial to managing future tax liabilities.