Double Cab Pick-Ups Reclassified as Company Cars:
What It Means for Fleets and Drivers
Starting in April 2025, the UK government will reclassify double-cab pickups with a payload of one tonne or more as company cars for tax purposes. Announced in the Autumn Budget, this change means a significant increase in benefit-in-kind (BIK) tax for drivers, with employees likely facing thousands of pounds more in tax annually compared to the current flat rate of £3,960.
Why the change?
This policy shift addresses longstanding debates over vehicle classifications, with HMRC clarifying that certain vehicles, including double-cab pickups, now fall under car rather than van tax regulations. Traditionally, double-cab pickups were classified as light commercial vehicles (LCVs), benefiting from lower BIK tax rates fixed at a flat amount.
Key Changes and Implications
- Benefit-in-Kind (BIK) Tax Increase
Previously, double-cab pickups enjoyed a flat BIK tax rate as commercial vehicles. Under the new classification, they will be taxed based on CO₂ emissions, like standard company cars. This means higher BIK taxes, especially for high-emission models. - Higher Employer National Insurance Contributions (NIC)
Employers will see an increase in NIC costs since the taxable benefit amount for these vehicles will rise under the company car classification. This may impact budgets for companies with fleets of double-cab pickups. - Increased Costs for Employees
Employees who use a double-cab pickup as a company vehicle will face higher personal tax liabilities. For instance, popular models like the Ford Ranger, which falls into the highest 37% tax bracket due to high CO₂ emissions, could cost drivers up to £13,320 per year in tax under a 60% tax rate. - Fleet Management Adjustments
With the increased costs, companies may reconsider vehicle choices for employees, possibly shifting to lower-emission vehicles to manage tax costs.
Transitional Provisions to Ease the Shift
For businesses that purchased or leased double-cab pickups before April 6, 2025, transitional provisions will allow them to keep the current tax treatment until the earlier of either vehicle disposal, lease expiry, or April 2029. This temporary relief aims to help businesses adjust to the new rules.
This reclassification marks a significant change in tax treatment, affecting employers and employees alike. Both may need to review vehicle options carefully as this policy unfolds.