Double-Cab Pickups – Should You Change Your Vehicle Before the April 2025 Tax Change?

Double-cab pickups (DCPUs) are a staple in many businesses, particularly in the agricultural and construction sectors, thanks to their practicality and favorable tax treatment. However, from April 2025, a major tax policy shift will reclassify all DCPUs as cars for tax purposes, eliminating their previous tax advantages.

If your business relies on double-cab pickups with a payload of one tonne or more, you may need to act now to avoid higher tax costs.

What’s Changing?

Currently, tax treatment differentiates DCPUs based on their payload capacity:

• Under 1 tonne → Treated as a car for tax purposes.
• 1 tonne or more → Treated as a van, benefiting from lower tax costs.

The advantages of DCPUs being classed as vans:

Lower benefit-in-kind (BIK) charges than cars, reducing taxable employee benefits.
Full tax relief in the year of purchase through Annual Investment Allowance (AIA) or Full Expensing, unlike cars, which have slower capital allowances.
VAT recovery is allowed for businesses where there is any business use, whereas VAT is not recoverable on cars used for business with any private use.

However, from 1 April 2025 (for corporation tax) and 6 April 2025 (for income tax), all DCPUs will be treated as cars for tax purposes. This means:

• Higher BIK charges for employees.
• Slower capital allowances, increasing taxable profits.
• No full tax deduction in the year of purchase.

Why Is This Happening?

The change stems from a Court of Appeal ruling on hybrid vehicles, which determined that unless a vehicle is designed “first and foremost” for transporting goods, it should be treated as a car. The government initially planned to introduce this change last year but delayed it (possibly due to the election). Now, it is moving forward.

Are There Any Transitional Rules?

Yes, but time is running out to take advantage of them.

DCPUs purchased before the rule change will retain their existing capital allowances treatment.
Employers that purchase, lease, or order a DCPU before 6 April 2025 will still be able to use the previous tax treatment for benefit-in-kind purposes until the earlier of:

• Vehicle disposal
• Lease expiry
• 5 April 2029

The VAT rules remain unchanged, meaning:

• DCPUs under 1 tonne remain classed as cars.
• DCPUs of 1 tonne or more continue to be classed as vans for VAT recovery purposes.

Should You Change Your Vehicle Before April 2025?

If your business relies on DCPUs, you should assess your options now. In many cases, bringing forward vehicle purchases or leases before April 2025 could result in significant tax savings.

Key Considerations for Your Business:

Do you need a new vehicle soon? If so, buy before April 2025 to retain tax advantages.
Would leasing suit you better? Locking in a lease before April 2025 will allow you to keep the van tax treatment until 2029.
Will your employees be affected? Review how the higher BIK charges will impact company vehicle users.
What are your long-term plans? If you plan to keep using DCPUs for several years, acting before the deadline could protect your tax benefits.

Next Steps: Talk to Us

Do you own or plan to buy a double-cab pickup?
Time is running out to take action before the new rules take effect!

At Merranti Accounting, we can help you:
Understand how the tax changes will impact your business.
Review whether buying or leasing before April 2025 makes sense.
Optimise your business vehicle strategy to minimise tax costs.

Get in touch with us today to discuss your options!

Find more from the spring news letter here