Double cab pickups remain as commercial vehicles for tax purposes after Government U-turn

February 20, 2024 by

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The Government has made an unexpected U-turn and cancelled its decision to class double cab pickups as cars rather than commercial vehicles for BIK tax.

  • Double cab pickups will continue to be classed as commercial vehicles for BIK tax purposes
  • This reverses Government’s previous decision to change BIK tax classification of double cab pickups to cars
  • Government says change in policy is after listening to feedback from businesses and car industry

Just over a week after announcing it was going to change the classification of double cab pickups with a payload of one tonne or more from commercial vehicles to cars for both capital allowance and BIK (Benefit in Kind) tax purposes, the Government has announced a U-turn following concerns from businesses and the car industry about the adverse impact the move would have on the economy. This means double cab pickups will continue to be classed at the lower tax rate of light commercial vehicles for BIK tax purposes.

The Government acknowledged that its decision to change the tax classification ‘could have an impact on businesses and individuals in a way that was not consistent with the government’s wider aims to support businesses and including vital motoring and farming industries’.

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.”

The change in tax classification was due start from 1 July 2024 but critics, such as Mike Hawes, the Chief Executive of the SMMT (Society of Motor Manufacturers and Traders) had pointed out that, “Double-cab pick-ups are critical business tools for many companies and sole operators across Britain,” and that taxing them as cars for BIK purposes would, “raise costs significantly and make them an untenable choice for many,”. He also highlighted that the short notice of the change in tax classification gave insufficient time for the industry to adapt to such a major policy change.

Commenting on the Government’s latest announcement,  Mike Hawes, SMMT Chief Executive, said: “This is a sensible decision and will come as a relief to the many sole traders and businesses, especially in the construction and farming sectors, that rely on double cab pickups for their livelihoods. Such a move, especially with little notice, would have damaged the market and decarbonisation aims. With the cost of living already high we should be looking at pulling every lever to boost, rather than limit, new vehicle uptake with efficient and zero emission models.”

Double cab pickups with a payload of less than one tonne will continue to be classified as cars rather than commercial vehicles, incurring huge BIK tax payments versus those classed as light commercial vehicles.

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