Maximise Your Tax Benefits: New HMRC Guidance on Double-Cab Pickup Vehicles
HMRC has recently issued updated guidance on the classification of Double-Cab Pickup (DCPU) vehicles, impacting tax treatment for car benefits, capital allowances, and business deductions. If you own or are considering purchasing a DCPU, these changes could significantly affect your tax position.
What’s Changing?
Previously, HMRC classified DCPUs with a payload of 1 tonne or more as goods vehicles, qualifying them for favourable capital allowances and benefit-in-kind tax treatment. However, following the Autumn Budget 2024, HMRC has revised its stance:
- From April 2025 (1st for companies, 6th for individuals), the payload test will no longer apply.
- Instead, HMRC will assess the vehicle’s primary suitability at the time of construction.
- Since DCPUs are considered ‘dual-purpose’ vehicles, they will now be classified as cars, not goods vehicles.
What Does This Mean for You?
- Increased Tax Costs: The shift from goods vehicle classification to car classification means higher Benefit-in-Kind (BiK) charges for employees and directors.
- Capital Allowances Impacted: Businesses purchasing a DCPU after April 2025 will no longer qualify for the enhanced capital allowances available for goods vehicles.
- Business Deductions Affected: Some deductions related to business use may be less favourable under the new classification.
How to Secure the Current Tax Benefits
Transitional arrangements are in place, meaning you can still take advantage of the current, more attractive tax treatment if you act before April 2025:
- Order Before 6 April 2025 – If you purchase a DCPU before this date, you may still benefit from the current, lower BiK charges for a few more years.
- Secure Capital Allowances – Entering into a purchase contract before 1 April 2025 (for companies) or 6 April 2025 (for individuals) ensures access to goods vehicle capital allowances as long as payment obligations occur before 1 October 2025.
What Should You Do Next?
If you’re considering a Double-Cab Pickup for business use, now is the time to act. Waiting until after April 2025 could significantly increase your tax liability.
At A&C Chartered Accountants, we specialise in helping businesses and individuals navigate complex tax changes. Contact us today for tailored advice on how to minimise your tax burden and make the most of your investments.