Changes to the tax treatment of double cab pickups

In the 2024 Autumn Budget the change to the tax treatment of double cab pickups (DCPUs) was annouced.

From 1^st April 2025 for Corporation Tax, and 6^th April 2025 for Income Tax, DCPUs will be treated as cars for the purposes of capital allowances, benefits in kind, and some deductions from business profits.

Capital Allowances

The existing capital allowances treatment will apply where expenditure is incurred as a result of a contract entered into before 1^st April 2025 (for Corporation Tax) or 6^th April 2025 (for Income Tax) and the expenditure is incurred before 1^st October 2025. In other words, the DCPU will qualify for AIA (this allows the full cost of the vehicle to be deducted from the business profits in the year that it is bought).

For those who already own such vehicles there will be no changes in the capital allowance treatment and AIA would have already been claimed.

After 1^st April 2025 or 6^th April 2025 DCPU will be treated as a car for capital allowance purposes and writing down allowances claimed. The rate of writing down allowance depends on the vehicles CO2 emissions, for example:

• New or second hand, CO2 emissions are 50 g/km or less                 –              Main rate allowances can be claimed, which is 18% of the car’s value per year
• New or second hand, CO2 emissions are over 50 g/km                    –              Special rate allowances can be claimed, which is 6% of the car’s value per year

Benefits in Kind

Transitional benefit in kind arrangements will apply for employers that have purchased, leased, or ordered a DCPU before 6th April 2025. They will be able to use the previous treatment, until the earlier of disposal, lease expiry or 5th April 2029.

VAT

There is no change to the VAT treatment of DCPU. Vehicles with a payload of 1 tonne or more will continue to be classified as goods vehicles for VAT purposes, allowing VAT to be reclaimed under the usual rules.

In summary, for those who retain their DCPU that they currently have there are no changes to how they are treated. One option is to trade them in before 31st March 2025 for a new DCPU, doing this would allow you all the same current tax reliefs in terms of capital allowances and VAT and BIK charges up until 5th April 2029 (or when they are disposed of or the lease expires). The optimal lease length would therefore be 4 years.

Hopefully this helps clarify the position going forward, but please do not hesitate to contact us should you wish to discuss further.