Car on blurry road

Employers: HMRC U-Turns on Double-Cab Pickups

Glen Huxter, Director, Head of Employment Tax
22/02/2024
Car on blurry road
This is for employers who provide directors or employees with a double-cab pickup.

What’s the news?

HMRC had said, “From 1 July 2024 most, if not all, double cab pickups will be classified as cars when calculating the benefit charge.”

However, quicker than it takes to perform a handbrake turn, the government has announced that its existing guidance is withdrawn.

What’s going on?

Broadly, whether a Double Cab Pick Up (D-CPU) is a car or van for tax purposes followed the VAT definition such that vehicles with a payload of 1 tonne or more were regarded as vans.

However, in 2020 the Court of Appeal (CoA) ruled in HMRC’s favour that whether a vehicle is a van or car should be based on the primary construction and purpose of the vehicle. The CoA also ruled that in finely balanced cases, the default position is the vehicle is a car.

HMRC issued guidance in February 2024 that from July 2024 it would regard nearly all D-CPUs as a car for income tax purposes. In only seven days since this announcement, the government has reflected and indicated a change of direction to this guidance.

What’s next?

For now, a D-CPU with a payload of 1 tonne or more will continue to be treated as a van for income tax purposes.

The Financial Secretary to the Treasury is quoted, “We will change the law at the next available Finance Bill in order to avoid tax outcomes that could inadvertently harm farmers, van drivers and the UK’s economy.”

The latest announcement also confirms that HMRC will class D-CPUs of less than 1 tonne as a car for tax purposes.

What does this mean for employers?

Company cars incur a higher benefit in kind values compared to van benefits. Reversing the guidance will be welcome news for many employers and their employees, especially those in the farming and motor industries.

Employers who provide D-CPUs should pay particular attention to the vehicle’s payload to determine whether the company van or company car benefit in kind rules apply. Additionally, when fuel is also provided for D-CPUs that are classed as a car, the punitive company car fuel benefit charge will apply when private travel is permitted.

Therefore, employers who provide D-CPUs who have not already considered the CoA Coca Cola case ruling would be well advised to assess whether their D-CPUs are cars or vans for tax purposes.

How can Crowe help?

At Crowe, our employment tax specialists can guide you through the changes and assess the impact on your business. We can also help you with putting in place changes to your vehicle policies and help with employee communications to reduce the burden on HR.

For further advice, please contact Glen Huxter or your usual Crowe contact.

 

Insights

The government has scrapped its plan to classify certain double-cab picks ups as cars for tax purposes.
Reporting of all benefits and paying Class 1A NIC via payroll will be enforced in April 2026, employers may start planning for the business now.
Effective from 1 January 2024 there will be changes to the Working Time Regulations.
The government has scrapped its plan to classify certain double-cab picks ups as cars for tax purposes.
Reporting of all benefits and paying Class 1A NIC via payroll will be enforced in April 2026, employers may start planning for the business now.
Effective from 1 January 2024 there will be changes to the Working Time Regulations.

Contact us

Glen Huxter
Glen Huxter
Director, Head of Employment Tax
London