April 1st 2025 BIK Changes Affecting Double Cab Pick-ups

BENEFIT IN KIND (BIK)

HMRC has updated its legislation regarding the classification of double cab pick-ups, with regards to BIK, to be considered as cars as opposed to commercial vehicles from 6th April 2025.

Double cab pick-ups will be moving away from the previously set flat rate of £3,960 and instead will be subjected to the car BIK rate, which can vary between 2% and 37% based on the vehicle’s CO2. From 6th April 2025, electric double cab pick-ups with over 1-tonne payload will be subject to company car BIK rates (3%), increasing by 1% annually until 2028.

CAPITAL ALLOWANCES (CA)

Capital allowances allow businesses to deduct some or all the value of the items (such as vehicles) from the profits before tax. From 1st April 2025, double cab pick-ups will also be classified as company cars with regard to CA.

Double cab pick-ups will be moving away from the previous classification as ‘plant and machinery’ for CA purposes and instead will be subjected to the company car rates, which can vary between 6%, 18% and 100%, based on the vehicle’s CO2

If you are a current owner or looking to purchase, lease, or order a double cab pick-up before 6th April 2025, HMRC has instated a transitional period before the cut-off date, whereby you will have the existing treatment until the earlier of disposal, lease expiry, or 5th April 2029.

This mitigation will ensure that all double cab pick-ups already owned or purchased before 6th April 2025 will not be subject to the BIK changes and will be classified as commercial vehicles.

Each case will be judged on an individual basis on whether the vehicle will be treated as purchased, leased, or ordered before 6th April 2025. You can demonstrate this by providing a contract, deposit documentation, written statement or email from the dealership/supplier confirming that an order has been placed.

It has been concluded, from the Court of Appeal in Payne & Ors, that double cab pick-ups are equally suited to convey both passengers and goods, therefore not demonstrating a predominant suitability.

As a result, dual-purpose double cab pick-ups will be considered as company cars for purposes of capital allowances, benefits in kind, and some deductions from business profits.

Extended cab pick-ups are affected however single cabs will be unaffected by the changes as HMRC ruled that they demonstrate clear suitability for commercial use.

For end-user customers (such as those who choose to Lease) utilising double cab pick-ups as company cars, the new legislature will incur the new tax treatment for vehicles purchased, leased, or ordered from 6th April 2025.

VAT treatment of double cab pick-ups remains unaffected. All double cab pick-ups with payloads over 1 tonne qualify for VAT reclaims if the business which purchases the vehicle is VAT registered. The changes only impact capital allowances, benefits in kind, and some deductions from business profits.

Yes! Providing the order is placed no later than 05/04/2025, the vehicle will be treated as a commercial vehicle by HMRC.  For customers looking to Lease, Yorkshire Fleet Management can help with this.

Any vehicles ordered after 05/04/2025 will be reclassified as cars by HMRC.