Within the Autumn Budget 2024, the government announced that HMRC will change its policy for double cab pick-up vehicles (DCPUs) for Benefit in Kind tax purposes from 1 April 2025 for corporation tax and 6 April 2025 for income tax and national insurance contributions (NICs).
From these dates, HMRC will treat vehicle as a van only if the construction of the vehicle means that it is primarily suited for the conveyance of goods.
The revised policy means that DCPUs with a payload of one tonne or more will be treated as cars for the purposes of capital allowances, Benefits in Kind (BiK), and some deductions from business profits. HMRC argue that this is because typically these vehicles are equally suited to convey passengers and goods and have no predominant suitability.
As a result of these changes, tax liabilities may be increased, or tax relief will be given at a slower rate where a vehicle is classified as a car rather than a van.
Benefits in Kind
Transitional benefit in kind arrangements will apply for employers that have purchased, leased, or ordered a DCPU before either 1 April 2025 or 6 April 2025 as applicable. They will be able to use the previous treatment, until the earlier of disposal, lease expiry, or 5 April 2029.
Capital Allowances
For the purposes of capital allowances and deductions from business profits, HMRC’s revised policy applies with effect for expenditure incurred on or after either 1 April 2025 or 6 April 2025 as applicable. However, HMRC states that it will continue to apply its current policy for expenditure incurred up to 1 October 2025 where it was incurred because of a contract entered into before either 1 April 2025 or 6 April 2025 as applicable.
If you are at all concerned in relation to the relevant costs or reliefs that may be available, we recommend seeking professional advice beforehand. Please call 01825 746 888 or email mail@sgllp.co.uk to arrange an initial consultation with someone from the Simmons Gainsford team.