Background
In last week’s Muras Matters we reported on the announcement by HMRC that from 1 July 2024 they would be changing their guidance on double cab pickups and that for benefit-in-kind purposes (BIK) they would no longer be classified as vans and individuals would be taxed at the higher rates for company cars.
How quickly things change in tax (although not usually this quickly!). Only one week later and HMRC announced a major reversal that the new guidance will be withdrawn.
The rules will revert back to the original guidance and double cab pickups will continue to be classified as vans for BIK purposes.
Detail
Following criticism from farmers and the motor industry the government has abandoned the plans to tax double cab pickups as company cars for BIK purposes. The statement by the government acknowledged that the updated guidance could impact business and individuals in a way that was not consistent with its wider aims to support businesses.
A vehicle is not treated as a car for VAT if it has a payload of one tonne or more. Following a Court of Appeal decision in a case from 2020, HMRC believed this approach was no longer sustainable for BIK and capital allowance purposes and announced a vehicle would not be treated as a car for these purposes if it was primarily suited for carrying goods. This approach was likely to result in most, if not all, double cab pickups being classified as cars.
However, this major U-turn means that double cab pickups will now continue to be treated as commercial vehicles where they have a payload of one tonne or more for BIK purposes, VAT and capital allowances.
Legislation will be included in a future Finance Bill to ensure these vehicles continue to be treated as vans for tax purposes.
If you would like more information on the points raised above, or the tax treatment of company vehicles please speak to our Tax Director, Jenny Marks.
To see our other news items please visit our Muras Baker Jones – Blog.