Upcoming Tax Changes for Pick-Up Trucks: What You Need to Know

From 6th April 2025, significant tax changes will affect double cab pick-up trucks with a payload capacity of at least one tonne. These vehicles will no longer be classified as vans for Benefit in Kind (BIK) or capital allowance purposes. Instead, they will be categorized as passenger cars, resulting in increased BIK tax rates for employees and reduced capital allowances for businesses operating them as company vehicles.

Why This Matters: Impact on BIK and Capital Allowance

Right now, double cab pick-ups enjoy van tax benefits, including:

• Lower Benefit-in-Kind (BIK) tax for personal use.
• Generous capital allowances, letting businesses write off up to 100% of the purchase price in year one.

However, from April 2025, these advantages disappear. Double-cab pickups will be taxed as cars, leading to:

• Sharply increased BIK rates, potentially tripling tax costs for employees using them personally.
• Reduced capital allowances, with first-year deductions dropping to as little as 6% of the vehicle’s cost, depending on emissions.

For context, a typical pickup’s annual tax liability could surge from around £1,800 to over £10,000, depending on the model.

Exceptions to the New Rules

Single and extended cab pick-ups remain classified as commercial vehicles since HMRC considers them designed primarily for business use. This means they continue to benefit from the current tax advantages. Furthermore, used double cab pick-ups will not be affected by these changes, providing an alternative for businesses and individuals looking to avoid the new tax implications.

VAT Rules Remain Unchanged

Despite the adjustments in BIK and capital allowances, VAT rules for double cab pick-ups remain the same. VAT-registered businesses can still reclaim VAT on eligible vehicle payments, provided the pick-up has a payload of at least one tonne.

The Clock Is Ticking: Buy or Lease Before April 2025

If you are considering purchasing or leasing a double cab pick-up truck, it may be beneficial to act before these changes come into effect to take advantage of the current tax rates. If you purchase or lease a pickup before the deadline, you can lock in the current tax rules until at least 2029. The tax changes are approaching fast, and delaying your decision could mean higher costs for your business.

• Not sure what’s best for you? We’re here to help you navigate these changes and find the right solution.
• Thinking of buying or leasing? Act now to secure your pickup before demand spikes and availability drops.

Key Dates for the Tax Changes

• 1st April 2025: Capital allowance changes take effect.
• 6th April 2025: BIK changes go live.
• 5th April 2029: Vehicles purchased, leased, or financed before the deadline will continue under the old rules until this date or until they are disposed of.

At Vanwise, we’re committed to keeping your business on the road without unnecessary expenses. Contact us today or check our website to explore our latest pickup deals.
Stay informed and consult a tax professional to understand how these changes impact your specific situation.