The sun is setting on truck tax perks
Important news for pick-up truck enthusiasts and company car drivers alike!
The UK’s tax authorities, HMRC, have recently announced a significant update that’s bound to reshape the landscape of the pick-up truck market. For years, pick-up trucks with a payload of over one tonne have enjoyed a tax classification as vans rather than cars, offering a tax break for private individuals using them as company cars. This meant lower benefit-in-kind taxes compared to regular cars like saloons, hatchbacks, or SUVs. However, all that is set to change.
On 12 February 2024, HMRC released note EIM23151, marking a pivotal shift in policy. From 1 July 2024, new pick-ups purchased, leased, or ordered will no longer benefit from this tax loophole. This move aims to address the evolving use of double-cab pick-ups, which, with their plush interiors and extended cabins, have increasingly become the vehicle of choice for both work and leisure, blurring the lines between commercial vehicles and private cars.
Why the Change?
The heart of the matter lies in the classification of pick-ups. Traditionally, vehicles with a payload of more than one tonne were seen as closer to commercial vans than to private cars, a distinction that benefited many from a tax perspective. However, as double-cab pick-ups became more luxurious and commonly used for personal transport, HMRC decided it was time to tighten the rules.
What Should You Do?
If you’re considering a double-cab pick-up and are concerned about the upcoming changes, there’s still a window of opportunity. Purchasing or leasing a double-cab pick-up before the 1 July 2024 deadline will allow you to enjoy the lower benefit-in-kind tax rate until 5 April 2028. For those looking to maximize utility while minimizing tax, a single-cab pick-up might be the way to go, as it remains classified primarily for the conveyance of goods.
The Background:
This decision stems from a legal precedent set by the Court of Appeal in the case of Payne & Ors (Coca-Cola) v R & C Commrs (2020), which highlighted the versatility of crew vans as both commercial and private vehicles. This case has influenced HMRC’s stance on double-cab pick-ups, leading to the upcoming policy change.
What’s Next?
Experts, including those at CAR magazine, predict a surge in double-cab pick-up sales as the deadline approaches, followed by a potential decline as the tax benefits disappear. However, the emerging market for all-electric pick-ups, such as the Ford F-150 Lightning and Rivian R1T, may offer a new twist, with company EVs enjoying lower benefit-in-kind charges.
In summary, the landscape for pick-up trucks in the UK is on the brink of change. Whether you’re in the market for a new vehicle or just keeping an eye on industry trends, these developments are sure to offer both challenges and opportunities. Stay tuned, and happy driving!