HMRC has updated guidance on the taxation of double cab pick-up trucks after fleets were left confused as to which vehicles would be subject to company car tax.
The Government announced in the Autumn Budget that double cab pick-up trucks would be treated as company cars for tax purposes, dramatically increasing the benefit-in-kind (BIK) tax paid by drivers by thousands of pounds from April.
It initially defined a double cab pick-up truck for the purposes of the BIK tax change as having a front passenger cab that contains a second row of seats and is capable of seating about four passengers, plus the driver.
It said it should also have four doors capable of being opened independently, whether the rear doors are hinged at the front or the rear (two-door versions are normally accepted to be vans), and an uncovered pick-up area behind the passenger cab.
However, in the new guidance, HMRC has now changed its definition, omitting the need for all four doors to be able to be opened independently.
Instead, it says that the vehicle will be considered a double cab pick-up for BIK purposes if it has “four doors, whether the rear doors are hinged at the front or the rear” – two door versions are normally accepted to be vans.
It means that extended, extra or so-called king cabs or super cabs, such as the Toyota Hilux Extra Cab (see below), will now be subject to company car tax.
HMRC says that most double cab pick-ups are expected to be classified as cars when calculating the benefit charge. This is because typically these vehicles are equally suited to convey passengers and goods and have no predominant suitability.
One fleet manager, with a 300-vehicle fleet, including a number of double cab pick-ups, had been considering ordering up to 80 extended cab pick-ups as an alternative before finding out these vehicles also fall into scope.
“The market options for single cab pick-ups continue to shrink and extended cab options gave us the ability to offer an enhanced specification vehicle for our drivers,” she said.
When the Government announced that double cab pick-ups would be treated as company cars for BIK purposes, it said it was “aligning” its treatment to reflect a ruling by the Court of Appeal, involving HMRC and Coca-Cola, regarding the primary suitability of a vehicle.
At the time, a Treasury spokesperson explained: “The Government announced that HMRC will change its guidance on the tax treatment of DCPUs (double cab pick-ups) to align with case law, reflecting the Court of Appeal’s judgement that multipurpose vehicles which are equally suited to carrying people and goods should be treated as cars.
“It is right that their tax takes into account the purpose for which they are primarily suited.”
In 2020, HMRC successfully argued in the Cort of Appeal that Coca-Cola’s Vauxhall Vivaro and VW Transporter T5 Kombis (1st and 2nd generation) were cars and not vans.
HMRC guidance issued in the wake of the Coca-Cola ruling said that “one would need to demonstrate that the predominant suitability of the vehicle in question was for the conveyance of goods or burden, in order to be classified as a goods vehicle”.
It added: “The courts’ view was that this imports something more than marginal, or just about (51% to 49% for example).”
In passing judgement in the Coca-Cola case, Lady Asplin had stated that “primarily means something more than a suitability which is first in the list by a whisker”.
“It means first and foremost. It cannot encompass very narrow margins.”
HMRC previously told Fleet News that it would not be providing a blanket decision on whether any particular makes/models of vehicle should be regarded as a car or a van for BIK purposes.
This is because the standard version may have been adapted in the factory, by the car dealership, or once acquired by the employer, it said.
As well as issuing a new definition for double cab pick-ups, HMRC has confirmed that the VAT position remains unchanged.
Fleet News previously reported that there would be no change to VAT treatment as a result of the BIK tax change and there would be no impact on the level of VED fleets would have to pay.
Transitional BIK arrangements will apply for employers that have purchased, leased, or ordered a double cab pick-up before April 6, 2025.
The Treasury says that they will be able to use the previous treatment, until the earlier of disposal, lease expiry, or April 5, 2029.
