The HMRC Double-Cab Pickup Tax Saga…so far

In a recent announcement, HM Revenue and Customs (HMRC) unveiled a substantial change in taxation, significantly affecting the classification of double cab pick-up trucks. This decision, effective from July 1, 2024, on vehicles ordered from that date, reclassifies most, if not all, double cab pick-ups as cars for tax purposes, overturning previous distinctions that favored them as vans. Then, just 6 days later, they performed a massive U-Turn.

Historically, double cab pick-ups were a popular choice for businesses due to favorable tax treatment. Being considered vans rather than cars for benefit-in-kind (BIK) tax purposes led to lower tax liabilities, making them an economical option for many fleets and individual drivers. However, HMRC's decision on 12th February 2024 to reclassify these vehicles as cars would have resulted in higher tax rates based on factors such as CO2 emissions and list price.

The best of both worlds, double-cab pickups have been a popular choice for many tradespeople in the UK for several years. That all looks set to change from 1st July 2024.

To give you an example of how this was going to hit people in the waller, let’s consider the Ford Ranger, the UK's most popular pick-up, with CO2 emissions exceeding 200g/km. Under the previous classification as a van, the annual BIK tax for a 20% taxpayer amounted to £792, or £66 per month. For a 40% taxpayer, it was £1,584 annually, or £132 per month. However, under the proposed new classification as a car, the BIK tax for the same vehicle in the highest bracket of 37% would have amounted to £3,960 annually, or £330 per month for a 20% taxpayer, and £7,920 annually, or £660 per month for a 40% taxpayer.

An update posted on the Government website on 19th February 2024 said: “The government has acknowledged that the 2020 court decision and resultant guidance update could have an impact on businesses and individuals in a way that is not consistent with the government’s wider aims to support businesses, including vital motoring and farming industries.”

As part of the HMRC statement on 19th February 2024, Nigel Huddleston, Financial Secretary to the Treasury, said “We will change the law at the next available Finance Bill in order to avoid tax outcomes that could inadvertently harm farmers, van drivers and the UK’s economy.”

It makes you wonder how much public money and governmental time has been spent on this to date?