Major tax changes on Twin Cab Pickups
In February 2024, HMRC set out to change the tax Benefits In Kind (BIK) for company car drivers driving twin cab pickups. The very same week, HMRC made a U-turn on this new tax rule. Now, after being announced in the Autumn Budget on 30 October 2024, from 6 April 2025 these vehicles will be classified as cars for capital allowances and BIK purposes – losing their ‘commercial vehicle’ status
Before 5 April 2025, pickups were classified by the definitions used for VAT purposes based on payload capacity, with anything under one tonne classified as a car, and anything a tonne and over as a van. Pick-ups have been classified in the grey area between passenger cars and vans for some time, meaning individuals using a twin cab pick-up as company cars have been able to pay less benefit-in-kind compared to a regular saloon, hatchback or SUV.
The impact on personal tax bills will be significant, as shown in the example below:
One of the most common twin cab pickups in the UK is the Ford Ranger with a list price of circa £60,000 and CO2 emissions of over 200g/km.
Under the current rules, provided the payload of the double cab pickup is 1 tonne or over, then by concession it’s taxed as a van BIK.
- Therefore, under the old rules, a double cab pickup would have incurred a BIK based on the van benefit in 2025/26 amounting to £4,020 and the van fuel benefit of £769. A higher rate taxpayer would have a tax liability of £1,916 per annum, and the Class 1A National Insurance (NIC) charge at 15% would be £718.
- With the reclassification under the new rules for 2025/26, the double cab pickup will now incur a car BIK amounting to £22,200, and if free private fuel’s also provided, then it’ll be a combined taxable benefit of £32,634. A higher rate taxpayer would therefore have a tax liability of £13,054 and the employer Class 1A charge would be £4,895.
This means an additional Class 1A NIC cost of £4,177 to the employer, whilst the increase in tax for a higher rate taxpayer amounts to £11,138.
The reclassification changes therefore result in an overall increased tax cost of £15,315 for 2025/26.
TRANSITIONAL RULES
There are, thankfully, transitional rules applied to twin cab pickups, either owned, leased or ordered before 6 April 2025. Current rules will continue to apply to these vehicles throughout the period of ownership/lease or until April 5 2029, whichever is soonest.
EXAMPLES of it will work
HMRC have provided examples of how the new rules will work.
Example 1 – Employer A purchased a double cab pickup (extended model) on 14 September 2025. As purchases on or after 6 April 2025 would be subject to the new rules, in this example the vehicle would be classified as a car and a car benefit charge would arise.
Example 2 – Employer B leased a double cab pickup on 10 December 2024. As this was leased before 6 April 2025, the previous rules continue to apply for Employer B until the earlier of the lease expiry, or 5 April 2029.
Example 3 – Employer C purchased a double cab pickup on 10 January 2024. This was subsequently traded in on 10 April 2025 for another double cab pickup. The previous rules apply to the first vehicle for Employer C until the trade in point on 10 April 2025. As the new double cab pickup was purchased after 6 April 2025 it will represent a car under the new rules and a car benefit charge would arise.
Example 4 – Employer D placed an order for a double cab pickup on 5 January 2025, but this was not available to the employer until 2 September 2025. As the agreement was entered into before 6 April 2025, the previous rules continue to apply for Employer D until the earlier of disposal, lease expiry, or 5 April 2029
GOING FORWARD
Classification of twin cab pickups (including extended, extra, king and super cab pickups, etc) need to be determined by assessing the vehicle as a whole at the point of availability to determine its primary suitability. It’s therefore expected that most double cab pickups will be reclassified as cars from 6 April 2025, as they are equally suited to carry passengers and goods.
There are four exceptions prescribed in the legislation which prevent a vehicle from being classified as a car, however it’s clear from the guidance that a vehicle will only fall outside the definition of a car if it’s predominant purpose is carrying goods.
If you’re unsure about your vehicle’s classification, or to discuss your options ahead of the tax changes, our team will be able to advise on the best route.