If your business owns or plans to purchase a pickup truck, significant tax changes came into effect from 1st April 2025. These changes will impact both existing company-owned pickups and new ones purchased after this date. Understanding how these changes affect your tax position is crucial to making informed decisions for your business.
What’s Changed?
Previously, double-cab pickup trucks benefited from being classified as commercial vehicles for tax purposes, meaning they qualifed for lower Benefit-in-Kind (BIK) tax rates when used by employees and favourable capital allowances for businesses.
However, from 1st April 2025, the government revised the classification rules. Under the new rules:
- New Pickups Purchased After 1st April 2025:
- Any double-cab pickup purchased after this date will no longer be automatically classified as a commercial vehicle for tax purposes.
- Instead, HMRC will assess pickups based on their payload capacity (at least 1 tonne) and their primary purpose (business vs. private use).
- Those that don’t meet the new criteria will be taxed as company cars rather than commercial vehicles, leading to higher BIK tax charges for employees using them personally.
- Existing Pickups Owned Before 1st April 2025:
- Pickups already owned or leased before this date will retain their current tax treatment, meaning they can still be classified as commercial vehicles.
- This means businesses can continue benefiting from lower company car tax rates and capital allowances.
Impact on Business Owners and Employees
- Increased Tax Costs: If your business purchases a new pickup after 1st April 2025 that doesn’t meet the commercial vehicle classification, the vehicle will be subject to standard company car tax rates, which are significantly higher than the current rates for pickups.
- Capital Allowances: Businesses will need to reassess their capital allowances on new pickups, as vehicles classified as cars will not benefit from the same deductions as commercial vehicles.
- Employee BIK Taxation: If an employee uses a pickup personally, and it falls under the new classification, their Benefit-in-Kind tax liability could increase substantially.
What Should You Do?
- Review Existing Fleet: If your business relies on pickups, assess whether your current vehicles still meet your needs and consider whether purchasing before April 2025 is beneficial.
- Plan New Purchases Carefully: If you intend to buy a pickup after April 2025, check whether it meets HMRC’s updated criteria to qualify as a commercial vehicle.
- Consider Alternative Vehicles: Depending on tax implications, businesses may need to explore other commercial vehicles to maintain tax efficiency.
- Seek Professional Advice: The new rules introduce complexities that could impact tax liabilities significantly. Consulting with an accountant or tax specialist can help you make the best financial decisions.
If you need guidance on how these tax changes will impact your business, get in touch with Greystone Advisory today. Our team can help you assess your options and develop a tax-efficient vehicle strategy for your company.
