Reclassification of Double-Cab Pick-Up Trucks: What It Means for UK Businesses from April 6, 2025

From April 6, 2025, a major change in vehicle taxation will impact thousands of UK businesses: double-cab pick-up trucks will no longer be classified as commercial vehicles for tax purposes. Instead, they’ll be treated as passenger cars—a shift that could have significant financial and operational implications for companies that rely on these vehicles.

What’s Changing?

Historically, double-cab pick-up trucks have been treated as commercial vehicles. This classification allowed businesses to benefit from:

• Capital Allowances: Businesses could claim capital allowances on the full cost of these vehicles, reducing their taxable profits.

• Reduced Benefit-in-Kind (BIK) Charges: Employees using pick-ups for personal use faced significantly lower BIK tax liabilities compared to cars.

• VAT Reclaim: Companies could often reclaim VAT on the purchase price, depending on usage.

However, from April 6, 2025, HMRC will reclassify these vehicles as passenger cars. This follows a reinterpretation of how double-cab pick-ups are used, especially in contexts where they serve dual purposes—business and private.

What Does This Mean for Businesses?

1. Higher Tax Costs for Employers and Employees

   
   

   Employers providing double-cab pick-ups as company vehicles will now face higher Class 1A National Insurance contributions. Employees will also see increased BIK liabilities—especially painful for those who were used to relatively low tax charges.

2. Capital Allowances Will Be Limited

   
   

   The full expensing regime for commercial vehicles won’t apply anymore. Instead, cars are subject to different rules—such as the Writing Down Allowance—which often results in slower tax relief over time.

3. VAT Reclaim May Be Restricted

   
   

   For cars, VAT is usually only reclaimable if the vehicle is used exclusively for business purposes—a high bar that few companies can meet. This could add another layer of cost when acquiring new vehicles.

4. Fleet Planning and Procurement Impact

   
   

   Businesses will need to reconsider their fleet strategy. Vehicles that were once tax-efficient may no longer be cost-effective. Some may look at alternative utility vehicles, while others might re-evaluate employee car policies entirely.

Are There Any Exceptions?

The reclassification will apply to new double-cab pick-ups registered from April 6, 2025. Vehicles already on the road and classified as commercial vehicles should retain their status for the time being—though this could be subject to review.

What Should Businesses Do Now?

• Review Your Vehicle Fleet: Identify all double-cab pick-ups and assess how this change will impact your costs.

• Consider Pre-Deadline Purchases: Buying vehicles before the April 6 cut-off may lock in the current favorable treatment.

• Seek Professional Advice: Tax, accounting, and legal advisors can help you model the impact and adapt your procurement strategies.

Final Thoughts

While this change may come as an unwelcome surprise to many, it’s a reminder of how dynamic tax policy can be—and how critical it is to stay ahead of the curve. Businesses that act early will be best positioned to manage the transition smoothly and make strategic choices that protect their bottom line