By FREDA LEWIS-STEMPEL
Owners of double cab pick-ups are the latest drivers to be stung by Labour's tax changes, as new rules first announced in the Autumn Budget come into play.
Leaving drivers 'considerably worse off' the changes will see double cab pick-ups - such as the Ford Ranger and Toyota Hilux - treated as cars for Benefit-in-Kind taxation from 6 April.
This means they will be taxed on CO2 emissions and the vehicle's list price and will no longer benefit from low fixed BIK rates or eligible for tax relief claims.
Popular with small business owners, there are thousands more of them on the roads in recent years, thanks in part to this tax break.
The tax loophole has made it affordable for builders, farmers and traders to have a vehicle that can double up as a personal car as well as a haulage vehicle.
You can cart anything in your flatbed truck from farm gates and sheep beet sacks, to scaffolding or garden landscaping supplies, and then go and pick the kids up from school.
But now that's all set to change as the most popular double cab pick-ups are subject to 37 per cent BIK rates, compared to previous fixed BIK rates for 'commercial vehicles' of £3,960 regardless of emissions or price.
Double cab pick-ups, including the best-selling Ford Ranger, are now subject to the same BIK rates as 'cars' with the majority of pick-ups being hit by 37% tax rates from 6 April
With BIK no longer fixed, business owners could see themselves having to pay many thousands of pound extra per year on their pick-ups. Only those who privately decide to buy a pick-up will feel no difference.
Ford - which makes Europe's best-selling pick-up - slammed the Government's changes saying: 'The change in taxation to double-cab pick-up vehicles for benefit-in-kind and capital allowance purposes is a rash move by the Government that will have a big impact on UK business'.
Before 6 April, a double cab pick-up (DCPU) with a payload of 1 tonne (1,000 kg) or more was classed as a commercial vehicle or van.
As such it came with some big tax benefits including lower Benefit-in-Kind (BIK) Tax and full Capital Allowances.
The BIK rate for 2024/25 is £3,960 under HMRC's current policy.
HMRC treated it this way for BIK calculations, capital allowances, deductions from business profits for hire costs and capital expenditure, and in doing so HMRC followed the definitions of 'car' and 'van' that apply for VAT (VAT Notice 700/57).
What's changed from 6 April 2025 for double cab pick-ups?
From that date double cab pick-ups have been taxed as cars instead of commercial vehicles.
That means that there's a higher Benefit-in-Kind tax rate to pay on them as it is no longer fixed and is instead based on CO2 emissions and the vehicle's list price, like cars.
Capital allowances are reduced too, and there are extra costs for employers.
The changes were first announced in the Autumn Budget 2024, when Rachel Reeves announced that HMRC will change its policy for DCPUs for direct tax purposes (no changes are being made for VAT purposes).
The Government said that HMRC will treat a vehicle as a van if it was constructed primarily for the conveyance of goods 'because typically these vehicles are equally suited to convey passengers and goods and have no predominant suitability'.
Isuzu has one of the UK's most popular double cab pick-ups the D-Max. The new BIK rates will see a 20% taxpayer spending over £2,700 a year compared to the old fixed rate of £792
Take the Isuzu D-Max: Previously if you used this vehicle personally you were taxed at a fixed, low rate.
BIK charge was £3,960 per year, meaning a 20 per cent taxpayer only paid £792 per year.
You could also claim tax relief on the full cost of the vehicle in the year you buy it, helping cash flow.
But under the new rules a Isuzu D-Max with a CO2 emissions figure of around 220g/km will be taxed at 37 per cent. Listed at £36,505 this means that the BIK change is £13,506.85 a year.
A 20 per cent taxpayer (Basic Rate) then will see an annual BIK tax cost of £2,701.37.
That's a big jump up from the £792 a 20 per cent taxpayer parts with currently.
A 40 per cent tax payer will have an annual BIK tax cost of £5,402.74, while a 45 per cent taxpayer will pay £6,078.
You'll also no longer be able to claim the full cost of the vehicle in year one (capital allowance), and instead will have to spread deductions over a few years which could cause cash flow problems and slows tax relief.
Similarly, Toyota Hilux buyers will end up paying over four times what they did previously in BIK. 40% taxpayers will pay over £7k compared to the previous fixed 'van' rate of £792
Similarly, Toyota Hilux 2.8 D-4D Invincible with a list price of £41,960 and a CO2 emissions figure of 223 g/km^3 (37 per cent tax rate) will now be eligible for a BIK rate of £15,525.
That's a basic rate of £3,105 for a 20 per cent taxpayer - more than a fourfold increase.
More expensive high-priced DCPUs like a £50k Ford Ranger will also fall into the 37 per cent BIK rate. So, 20 per cent taxpayers will have to cough up £3,550 in yearly tax or just over £7,000 for people in the 40 per cent bracket.
A spokesman for Ford UK told This is Money: 'The change in taxation to double-cab pick-up vehicles for benefit-in-kind and capital allowance purposes is a rash move by the Government that will have a big impact on UK business.
'The Ford Ranger is a true work truck with businesses relying on its capability and versatility to carry heavy loads and to tow.
'Double-cab pick-up trucks are an essential tool for the farming and agricultural sector, construction, transport and for small business owners such as landscape gardeners, who rely on the additional space provided not only for passengers but additional stowage, which will now carry a significant premium for many.'
Ford slammed the move saying that it's 'a rash move by the Government that will have a big impact on UK business' especially farmers and builders
When HMRC announced the change it said it was because the previous position was 'at odds with' a 2020 Court of Appeal ruling which determined that double cab pick-ups weren't primarily designed for business use as was expected before.
The Court of Appeal ruling in Payne & Ors v HMRC led HMRC to seek to abandon the fixed rate BIK policy, and Labour doubled down on this in the Autumn Budget 2024.
HMRC then updated its guidance on what’s considered to be a double cab pickup earlier this year in a move to clarify which vehicles are subject to the April changes, with a corrected definition that removed the requirement for all four doors to be independently opening.
So now a pick-up must have 'four doors, whether the rear doors are hinged at the front or the rear' to be considered a double cab pick-up for BiK purposes.
Yes, there is a transitional period for BIK purposes: an employer that has purchased, leased or ordered a double cab pick-up before 6 April 2025 can rely on the current treatment until the earlier of disposal, lease expiry or 5 April 2029.
The Ford Ranger made it into the top 10 light commercial vehicle bestsellers list last year, coming third behind its Ford van cousins demonstrating its wide popularity
Data from The Society of Motor Manufacturers and Traders Limited (SMMT) showed that the Ford Ranger was the most popular pick-up in the UK last year.
It's year-to-date tally at the end of December 2024 was 19,695 units – making it not just the best-selling pickup in the UK last year, but also the third best-selling light commercial vehicle overall.
In fact it only lost out to its Ford cousins ranking behind the Ford Transit Custom and Ford Transit.
Pick-ups are having a good year so far but that is likely due to many people getting in ahead of the 6 April change
The overall LCV market had a good year in 2024, but pick-up registrations dropped by 8.3 per cent.
However, while January 2025 saw a decline of -6.5 per cent compared to the same time the year before, while March 2025 saw a 40.6 per cent increase in pick-up sales compared to March 2024 and a year-to-date increase of 19.3 per cent in registrations.
This is unsurprising considering many people were likely making sure they got in and bought their pick-up before the new rules came into play at the start of April.
So far this year just the Ford Ranger is making it into the top 10 LCV models, according to SMMT data.
Facebook Conversations