PICK-UP TRUCK BIK LEGISLATION EXPLAINED

WHAT HMRC’S RECENT CHANGE IN BIK LEGISLATION MEANS FOR YOUR EXTENDED AND DOUBLE CAB PICK-UP TRUCK

In the Autumn Budget 2024, released on 30th October 2024, HMRC introduced a change in the legislature regarding the tax treatment of double cab pick-ups. Vehicles purchased from April 2025 will be classified as company cars for benefit in kind, capital allowances, and some deductions from business profits and subject to increased tax rates.

Isuzu UK assures you continual support and pledges to closely monitor the evolving situation, ensuring you receive the necessary assistance amid the regulatory changes. Consequently, this blog aims to help you navigate the key details of the new legislation and clarify frequently asked questions regarding the changes and how they may affect your double cab pick-up.

What are the new changes and how does this affect double cab and extended pick-ups?

Benefit in Kind (BIK)

HMRC has updated its legislation regarding the classification of extended and double cab pick-ups, with regards to BIK, to be considered as cars as opposed to commercial vehicles since 6th April 2025.

Double and extended cab pick-ups have moved away from the previously set flat rate of £4,020 (2025/26 tax year) and instead are subjected to the car BIK rate, which can vary between 3% and 37% based on the vehicle’s CO2. Since 6th April 2025, extended and double cab pick-ups with over 1-tonne payload are subject to company car BIK rates (3%), increasing by 1% annually until 2028.

Capital Allowances (CA)

Capital allowances allow businesses to deduct some or all the value of the items (such as vehicles) from the profits before tax. Since 1st April 2025, extended and double cab pick-ups are also classified as company cars with regard to CA.

Double and extended cab pick-ups have moved away from the previous classification as ‘plant and machinery’ for CA purposes and instead are subjected to the company car rates, which can vary between 6%, 18% and 100%, based on the vehicle’s CO2.

Will there be a BIK transitional period before the cut-off date?

If you purchased, leased, or ordered a double or extended cab pick-up before 6th April 2025, HMRC has instated a transitional period, whereby you will have the existing commercial vehicle BIK treatment until the earlier of disposal, lease expiry, or 5th April 2029.

This mitigation ensures that all double and extended cab pick-ups already owned, leased or ordered before 6th April 2025 will not be subject to the BIK changes and will be classified as commercial vehicles.

For capital allowance purposes the expenditure must also be incurred prior to 1 October 2025 for the double or extended cab pick-up to qualify as ‘plant and machinery’.

Each case will be judged on an individual basis on whether the vehicle will be treated as purchased, leased, or ordered before the 1st or 6th April 2025. You can demonstrate this by providing a contract, deposit documentation, written statement or email from the dealership/supplier confirming that an order has been placed.

Why have these changes been made?

It has been concluded, from the Court of Appeal in Payne & Ors, that double and extended cab pick-ups are equally suited to convey both passengers and goods, therefore not demonstrating a predominant suitability.

As a result, dual-purpose double and extended cab pick-ups are considered as company cars for purposes of capital allowances, benefits in kind, and some deductions from business profits.

Will single cab pick-ups be affected by this?

Extended cab pick-ups are affected however single cabs will be unaffected by the changes as HMRC ruled that they demonstrate clear suitability for commercial use.

What happens if you purchase a double or extended cab after the transitional period?

For end customers, utilising double cab pick-ups as company cars, the new legislature now incurs the new tax treatment for vehicles purchased, leased, or ordered since 1st or 6th April 2025.

Will the changes affect double and extended cab pick-ups from being VAT reclaimable?

VAT treatment of double cab pick-ups remains unaffected. All double cab pick-ups with payloads over 1 tonne qualify for VAT reclaims if the business which purchases the vehicle is VAT registered. The changes only impact capital allowances, benefits in kind, and some deductions from business profits.

Isuzu UK’s commitment to supporting its customers is of utmost importance and Isuzu will continue to monitor developments closely and collaborate with industry stakeholders to help you navigate these changes effectively. Please stay informed of the upcoming changes by visiting the HMRC page regarding the legislative changes www.gov.uk/government/publications/autumn-budget-2024.

(Information for guidance purposes only and subject to change)