HMRC to tax Double Cab Pick-Ups as cars from April 2025

The taxman is u-turning his own u-turn on pick-up trucks, signalling ‘huge’ incoming costs for limited company contractors.

HMRC has u-turned its u-turn on Double Cab Pick-Ups, by restarting its written-off plan to tax four-door, two-seating row vehicles as cars.

So from April 2025, DCPUs with a 1-tonne payload will no longer be taxed as vans — as HMRC initially said in Feb 2024 but then reversed.

The ‘360’ policy manoeuvre occurred in Autumn Budget 2024 but was hidden, says tax expert Helen Christopher, given that the chancellor chose not to mention it in her speech.

‘Huge difference in costs’

And potentially with good reason, like wanting to avoid an outcry over the swingeing costs of the move.

In fact, taxing DCPUs as cars (not vans any longer) triggers a “huge difference” in costs for contractors and other DCPU owners, added Christoper.

“Why?” the founder of Beansprout Consultancy continued. “Well, the benefit-in-kind on a van is far lower than that on a car”.

‘Versatile’

According to Pinks Asset Finance, the tax changes to DCPUs may hike costs for owners of the “versatile” vehicles by up to 210%.

“From April 1st, 2025, [DCPUs will be] treated as cars for corporation tax purposes,” reflected the firm’s founder Chris Pink.

“And from April 6th 2025, [DCPUs will be] treated as cars for [the purposes of] capital allowances and benefits-in-kind.”

‘Pricier double cab pick-ups loom’

Online, Pink didn’t share the maths behind the ‘210% hike,’ but he said DCPUs have threatened to become “pricier” for business owners ever since a legal ruling.

“This [tax] plan was put in place by the Tories following a Court of Appeal ruling,” confirms Dan Mepham, a contractor accountant.

“The plan was reversed only a week later, in February. But now they are in place again, DCPU drivers may feel a sense of deja vu.”

‘If eyeing a DCPU via limited company, purchase it before April’

Boss at SG Accounting, Mepham advised contractors what to do with a freshly signed DCPU lease, or if such a pick-up truck is sitting in their driveway in their company’s name.

“Bought or leased pre-April? You can use the current tax treatment until the car’s disposal, lease-end, or April 2029; whichever is the earliest.

“So if you’re thinking about buying a DCPU through your limited company, do it before April 2025,” he advised, adding:

“That’s assuming, as a PSC with a double cab pick-up, you actually want to enjoy the current preferential tax treatment on light commercial vehicles!”

‘Seems harsh for IT contractors’

Not open to question, however, is the significant number of professionals due to be hit by the DCPU tax changes, which are outlined at chapter 5.91 of Autumn Budget 2024.

Integro Accounting managing director Christian Hickmott said last night: “Many businesses genuinely use double cab pick-ups as an essential tool: farming, estate management; gardening, to name just a few. But many others choose them simply to benefit from the tax breaks.

“While many [tech] contractors will know that they fall into the latter category, the timing of this decision seems harsh when viewed alongside the other tax increases seen in the budget.”