InstantExpert
Treasury U-turns on double cab pickup tax
Tax advisers and agricultural and motoring clients have been left scratching their heads regarding a rapid about-turn by HMRC
HMRC has rowed back on a tax guidance decision to reclassify double cab pickups (typically double-row seating pickup trucks) as ‘cars’ for employment benefit and capital allowance purposes.
The government has now abandoned the plans, reacting to vehement criticism from farmers and the motoring industry.
Under the shelved plans, benefit-in-kind tax bills for double-row pickups could have seen a five-fold increase, which led to a strong reaction from the farming and construction sectors, which value their practicality and off-road abilities.
TAX
Double cab pickups
The proposed change could have seen the benefit-in-kind rising from something in the order of £4,500 per annum for a ‘van’, with associated fuel, to over £25,000 as a ‘car’. Employers would have faced an NIC charge on the corresponding increase at 13.8% as well.
Walk me through it
The initial change was flagged up on 12 February, when HMRC updated its tax guidance on the treatment of double cab pickups (DCPUs) following a 2020 Court of Appeal judgment (Payne & Ors (Coca-Cola) v R & C Commrs (2020) (BTC19)). This change meant that, from 1 July 2024, DCPUs with a payload of one tonne or more would be treated as cars rather than goods vehicles for capital allowances and benefit-in-kind purposes.
Common challenges
Treating DCPUs in this manner could have seen the benefit-in-kind, upon which tax is paid, increase several-fold, alongside a corresponding NIC charge for employers at 13.8%, with transitional rules through to 2028 to lessen the financial blow.
But the new guidance was reversed after a week. A joint Treasury/HMRC statement said that the government “has listened carefully” to views from farmers and the motoring industry “on the potential impacts” of the change in tax treatment.
Key takeaways
- Ultimately, there has been no change in the tax treatment of DCPUs for capital allowances and benefit-in-kind purposes
- The rules have now reverted back to the original guidance that was issued on 6 April 2002 and are set to be officially reversed at the next Finance Bill.
Got a suggestion?
Let us know what you’d like to become an instant expert in by completing our reader survey
