Double Cab Pick Up Tax U-Turn
Tucked away in last week’s budget, the Chancellor announced a U-Turn on the Double Cab Pick Up tax treatment (DCPUs) starting April 2025. If you already own one or are thinking of buying a double cab pick up, please read below
From 1 April 2025 for Limited Companies and 6 April 2025 for Sole Traders and Partnerships, DCPUs will be treated as cars for the purposes of benefits in kind for employees and capital allowances for businesses, together with other deductions from business profits.
The more favourable existing capital allowances treatment will apply to those businesses that purchase DCPUs before April 2025.
What this means for your business :
If you purchase a new double cab pick up before 6 April 2025, 100% tax relief will be available in the year of purchase. If you purchase a new pick-up after 6 April 2025, tax relief is available but as a percentage of the vehicle’s value. The rate (%) will depend on the CO2 emissions and will be one of the following:
- the full value of the car as 100% first-year allowances – new car with 0g/km emissions
- 18% of the car’s value (main rate allowances) – second-hand electric, new or used car with 50g/km or less emissions
- 6% of the car’s value (special rate allowances) – new or second-hand car with emissions over 50g/km
The relief will be applied every year until the allowance is fully used or the asset is sold or scrapped.
There has been no mention of the new rules affecting the VAT treatment at this time.
If you supply a Double Cab Pick Up to an employee or director
Transitional benefit-in-kind arrangements will apply for employers that have purchased, leased, or ordered a DCPU before 6 April 2025, with payment made by 1 October 2025. They will be able to use the previous treatment, until the earlier of disposal, lease expiry, or 5 April 2029.
Currently, double cab pick-ups do not give rise to a taxable benefit where private use is small. Under the new classification as a car, a taxable benefit arises where the vehicle is available for any level of private use, even if insignificant. This could lead to a benefit charge of up to 39% of the list price (by 2029/30) of the vehicle when used privately.
For cars purchased after the transition date, employers will face higher class 1a NIC charges at 15% of the list price on the supply of the vehicle, and the employees and directors will be taxed on a much higher charge based on the list price. ( eg on a Ford Ranger costing £48,000 a higher rate taxpayer would have a charge of £7,104 and the company would pay NIC of £2664)
If you are thinking of buying a double cab pick up, the message is to do it before April 2025.
If you are concerned about how this affects you, please get in touch.