Before a tax update in April this year, double-cab pick-up trucks followed light commercial vehicle (LCV) tax rules. Now, double-cab pick-up trucks that carry at least one tonne of payload are no longer classified as LCVs for benefit-in-kind (BIK) or capital allowance.
Pick-up trucks are instead classified as passenger cars, meaning higher BIK rates for operators and lower capital allowances for businesses utilising them as company vehicles.
Does this affect all pick-up trucks?
Back in February, the government clarified that double cab, king, extra, super cab and extended pick-ups will fall under the new tax rules from April 2025 onwards.
Simply put, if the truck has a second seating row and can seat four passengers plus the driver, it’s eligible. Likewise, if it has four doors or an uncovered bed area behind the passenger cab, it’s also eligible.
Before, most pick-ups were deemed by the HMRC as “clearly made for commercial use only” and were initially classified as commercial vehicles for tax purposes.
“There is nothing about these vehicles that renders them unsuitable for private use”, the government stated. Therefore, they will be taxed accordingly and treated as personal vehicles.
How much more will I pay?
While businesses could enjoy full capital allowances on double-cab pick-ups, allowing them to deduct the entire cost from taxable profits, the April 2025 change introduced a capital allowance drop to 18% – the standard car rate.
This means tax relief will reduce on new vehicle purchases, impacting cash flow for businesses relying on upfront deductions. This rule only applies to vehicles that produce emissions below 50g/km; anything above this qualifies for a lower rate of 6%.
Employers will also have more Class 1A National Insurance contributions (NICs) to pay. This applies to both the use of the vehicle and will be based on the list price and CO2 emissions.
To give you a real-world example of what this means, let’s look at the Volkswagen Amarok double-cab range.
When it comes to BIK (benefit-in-kind), pick-up trucks previously benefited from a flat-rate annual £3,960 BIK charge, like other light commercial vehicles, but now, a double-cab Volkswagen Amarok 170hp 2.0-litre diesel with CO2 emissions of 221g/km sits in the highest BIK bracket (37%), resulting in a BIK of £15,438. A 20% taxpayer (those who earn between £12,571 and £50,270) will pay £3,088 per year, while 40% taxpayers will pay £6,175.
Opting for the 3.0-litre 240hp diesel Amarok results in a £21,840 BIK; those taxed at 20% will pay £4,368 per year, and those at 40%, £8,736 per year – a significant increase over the entry-level pick-up.
VAT rules remain unchanged, meaning businesses running pick-up trucks must be VAT registered, and each truck must also have a one-tonne payload capacity. Meet these criteria, and your business can still reclaim VAT on vehicle payments.
How can I avoid the tax hike?
If you utilise most of your pick-up truck’s bed, then a single-cab model is the best option. Not only will you dodge the tax hike, but in most cases, you’ll also have a larger load area. If passenger space is mandatory, then replacing your double-cab pick-up fleet with electric SUVs might be a better option.
The BIK rate for electric cars increased from 2 to 3% recently and will continue to increase by 1% over the next three years. For example, if you own a £40,000 company EV; 3% of £40,000 is £1,200 – that’s the amount of the car’s value that is taxable. Note, this is still significantly lower than a petrol or diesel car, which could attract 25% or more.
New single-cab pick-ups are thin on the ground, but examples include the Toyota Hilux, Isuzu D-Max Utility, and Ford Ranger XL. Buy one of these, and it will remain in the light commercial vehicle category.
Unfortunately, this means steering clear of models like the Ford Ranger Wildtrack and Raptor, Toyota Hilux Double Cab, Isuzu D-Max Double Cab, and Volkswagen Amarok Double Cab. A shame, considering they are all great buys, but they succumb to the latest pick-up truck tax rules.
What about electric vans?
This has also changed. Before, electric vans flew under the taxman’s radar and were exempt, but now, they fall under the petrol and diesel van tax regulation. The plug-in grant will continue to 2026, meaning a £2,500 saving for vans less than 2,500kg (gross) and £5,000 for larger vans, those between 2,500kg and 4,250kg; heavier models are still subsidised up to £16,000.
The government’s reasoning for extending the plug-in grant was to accelerate electric van growth in the UK. While electric vans are now taxed, some small (up to 2.5 tonnes) vehicles eligible for the grant are listed below:
- Dacia Spring Cargo
- Citroen e-Berlingo
- Ford e-Transit Courier
- Mercedes-Benz eCitan
- Vauxhall Combo-e
And large vans (2.5-3.5 tonnes) include:
- Citroen e-Relay, and e-Dispatch
- Farizon SV
- Fiat e-Scudo, and e-Ducato
- Ford e-Transit Custom
- Iveco eDaily
What else should I know?
Those who purchased a pick-up before 6 April 2025 will continue to benefit from the previous tax rules until the pick-up is sold or disposed of, the lease or finance expires, or 5 April 2029 arrives (whichever comes first). Therefore, if you acted before the deadline, you’ll still benefit from the prior tax advantages for up to four years.
Read more:
