HMRC's Update Implies Higher Annual Tax Obligations for Certain Motorists, Amounting to an Additional £7,000 per Year
Updated: Labour's Tax Changes Sting Double Cab Pick-up Owners
Here comes another financial blow for double cab pick-up truck owners, as changes announced in the Autumn Budget are now in effect.
These changes mean that double cab pick-ups, including popular models like the Ford Ranger and Toyota Hilux, will be taxed as cars for Benefit-in-Kind (BIK) purposes from 6 April. This leaves drivers considerably worse off.
Gone are the lower fixed BIK rates and tax relief claims that owners of these vehicles have been enjoying. Instead, they'll now be taxed based on CO2 emissions and the vehicle's list price, like cars.
Double cab pick-ups have become increasingly popular among small business owners, thanks to the tax break that made it affordable for builders, farmers, and traders to own a versatile vehicle that serves both personal needs and business purposes.
With the new BIK rates, the most popular double cab pick-ups now face 37 per cent tax rates, compared to the fixed BIK rates for commercial vehicles of £3,960 regardless of emissions or price. Consequently, business owners could see themselves having to pay thousands of pounds more per year on their pick-ups. Only those who choose to privately buy a pick-up will feel no difference.
Ford, the manufacturer of Europe's best-selling pick-up, voiced its concerns over the government's changes, stating, "The change in taxation to double-cab pick-up vehicles for benefit-in-kind and capital allowance purposes is a rash move by the Government that will have a big impact on UK business."
Previous Tax Situation for Double Cab Pick-ups
Before 6 April, a double cab pick-up (DCPU) with a payload of 1 tonne or more was classified as a commercial vehicle or van, benefiting from lower BIK Tax and full Capital Allowances. The BIK rate for 2024/25, under HMRC's current policy, was £3,960.
Changes from 6 April 2025 for Double Cab Pick-ups
From that date, double cab pick-ups have been taxed as cars instead of commercial vehicles, leading to a higher BIK tax rate (based on CO2 emissions and vehicle list price) and reduced capital allowances, along with extra costs for employers.
The changes were first announced in the Autumn Budget 2024, with HMRC altering its policy for DCPUs for direct tax purposes (with no changes for Value-added Tax, VAT). The Government claims that HMRC will treat a vehicle as a van if it's constructed primarily for the conveyance of goods, as these vehicles are equally suited for passengers and goods and have no predominant use.
For instance, an Isuzu D-Max driver could see their annual BIK tax rise from the previous fixed rate of £792 to over £2,700 with the new rules. Similarly, a Toyota Hilux buyer will end up paying over £7,000 compared to the previous fixed 'van' rate of £792, representing a fourfold increase.
According to a Ford UK spokesperson, "The change in taxation to double-cab pick-up vehicles for BIK and capital allowance purposes is a rash move by the Government that will have a big impact on UK business." They added, "Ford Ranger is a true work truck with businesses relying on its capability and versatility to carry heavy loads and tow."
Doubled tax rates for double cab pick-up truck owners are set to take effect from 2025, regardless of the industry or finance involved in the business. This is due to the government's change in Benefit-in-Kind (BIK) taxation for these vehicles, announced in the Autumn Budget. Consequently, small business owners, such as builders, farmers, and traders, could face thousands of pounds more per year in tax on their pick-ups. Ford, manufacturers of Europe's best-selling pick-up, has expressed concerns about this change, stating it will have a significant impact on UK business.
