Manufacturer urges fleets to secure pick-up trucks before tax change

Fleets are being urged to procure their pick-up trucks now to retain the existing commercial vehicle classification and benefit from a more favourable tax treatment until April 2029.

It comes after HMRC updated guidance on the taxation of double cab pick-up trucks after fleets were left confused as to which vehicles would be subject to company car tax.

Isuzu UK welcomed the update. “We appreciate HMRC's latest clarification, which provides businesses with a more definitive understanding of how both double cab and extended cab pick-ups will be classified for benefit-in-kind and capital allowance purposes from April 2025,” said Alan Able, managing director of Isuzu UK.

“This additional guidance is essential for fleets, businesses and individual buyers as they navigate these significant changes.” 

The Government announced in the Autumn Budget that double cab pick-up trucks would be treated as company cars for tax purposes,  dramatically increasing the benefit-in-kind (BIK) tax paid by drivers by thousands of pounds from April.

It initially defined a double cab pick-up truck for the purposes of the BIK tax change as having a front passenger cab that contains a second row of seats and is capable of seating about four passengers, plus the driver. 

It said it should also have four doors capable of being opened independently, whether the rear doors are hinged at the front or the rear (two-door versions are normally accepted to be vans), and an uncovered pick-up area behind the passenger cab.

However, in the new guidance, HMRC has now changed its definition, omitting the need for all four doors to be able to be opened independently.

Instead, it says that the vehicle will be considered a double cab pick-up for BIK purposes if it has “four doors, whether the rear doors are hinged at the front or the rear” – two door versions are normally accepted to be vans.

James Pestell, board member at the Association of Fleet Professionals (AFP), said: “Pick-up taxation has been a subject of persistent confusion for fleets and the main benefit of this most recent advice from HMRC is that we finally appear to have a high degree of clarity, allowing vehicle operators to plan in accordance.”

Transitional BIK arrangements will apply for employers that have purchased, leased, or ordered a double cab pick-up before April 6, 2025. 

The Treasury says that they will be able to use the previous treatment, until the earlier of disposal, lease expiry, or April 5, 2029.

Able told Fleet News that Isuzu will continue to support customers through the transition by providing clear, accurate information with extended cab pick-ups also affected. 

He added: “We encourage businesses and individuals to act now to secure their Isuzu D-Max before the new tax regulations take effect, ensuring they benefit from the transitional arrangements and retain the existing commercial classification and more favourable tax treatment until April 2029.”

For capital allowances, HMRC has confirmed that if expenditure is incurred on a double cab pick-up with a payload of one tonne or more before April 1, 2025, for corporation tax purposes or April 6, 2025, for income tax purposes, it is not treated as a car for capital allowances purposes.

If expenditure is incurred on or after those dates, this interpretation of the legislation will no longer apply which means that most, if not all, double cab pick-ups will be treated as cars for capital allowances purposes as they are equally suited for the conveyance of goods or passengers.

However, it says that there are transitional arrangements which apply where an amount of expenditure is incurred as a result of a contract entered into before April 1, 2025, for corporation tax purposes, or April 6, 2025, for income tax purposes; and the expenditure is incurred on or after that date but before October 1, 2025.

If the transitional arrangements apply, then a double cab pick-up with a payload of one tonne or more will not be treated as a car for capital allowances purposes, says HMRC.

Further guidance is available in the capital allowances manual.  

HMRC stressed that it is the date the customer enters into a contract to purchase the vehicle and when the expenditure is incurred that is relevant. 

If the vehicle was ordered before April 1, 2025, the transitional rules still apply even if it is registered after the date.

The hire cost restriction largely follows the same approach as capital allowances except that what matters is the date that the contract for hire is entered into rather than the contract to purchase. HMRC guidance is available.  

Consequently, HMRC says that the registration date of the vehicle will not affect the transitional rules. 

If a contract for hire of a double cab pick-up with a payload of one tonne or more was entered into before April 1, 2025, for Corporation Tax purposes or April 6, 2025, for income tax purposes, HMRC says it would not matter if the car was not registered until after this date. 

Expenditure incurred before October 1, 2025, it added, would not be treated as expenditure incurred on the hire of a car. 

However, expenditure incurred on or after October 1, 2025, would be treated as expenditure on the hire of a car, regardless of when the contract for hire was entered into.