From April 2025, HMRC will reclassify double cab pick-ups as passenger cars instead of light commercial vehicles (LCVs). This change affects taxes for businesses and individuals, including Benefit-in-Kind (BIK), Corporation Tax, and Capital Allowances. Currently, these vehicles benefit from a flat BIK rate of £3,960 per year. From April 2025, BIK will be based on the vehicle’s list price and CO2 emissions, just like passenger cars.
Key Changes and Dates:
- 1 April 2025 – Double cab pick-ups will be treated as passenger cars for Corporation Tax
- 6 April 2025 – The same classification will apply for Income Tax, impacting BIK and profit deductions.
How Will Tax Change?
For example, a Ford Ranger emitting 230g/km CO2 would fall into the highest 37% BIK tax bracket, with a BIK value of £22,200 per year. A taxpayer in the 40% tax bracket would pay around £8,880 annually, which previously would be just £1584.
Capital Allowances (CA) Changes:
From 1 April 2025, double cab pick-ups will be classified as company cars for capital allowances, losing their previous plant and machinery classification. New tax rates will apply:
- 6% for high-emission vehicles
- 18% for lower-emission vehicles
- 100% first-year allowances for electric vehicles
This means businesses will no longer benefit from full expensing or the 100% Annual Investment Allowance (AIA).
Transitional Arrangements:
Businesses that purchase, lease, or order a double cab pick-up before April 2025 can continue using the current tax rules until:
- The vehicle is sold
- The lease expires
- 5 April 2029, whichever comes first
What Can You Do?
To avoid higher taxes, consider purchasing a double cab pick-up before April 2025. If you’re thinking of getting a Ford Ranger or similar vehicle, acting now could save money.
For more details or to find a quote, contact our team today.