The October 2024 UK Budget introduced a significant shift in tax policy, reclassifying double cab pick-ups as cars rather than commercial vehicles starting in April 2025. This change impacts Benefit-in-Kind (BIK) calculations, income tax responsibilities, capital allowances, and other tax treatments, increasing the cost of ownership for both businesses and employees who rely on these vehicles. Here’s a closer look at what this change means and how it may impact fleets, employees, and employers alike.

Why Are Double Cab Pick-Ups Now Treated as Cars?

The reclassification stems from the vehicle’s nature as both a work and private vehicle. Unlike traditional vans, many double cab pick-ups have seating arrangements that accommodate both business and personal use. Historically, double cab pick-ups were treated as commercial vans under BIK tax rates, meaning they were taxed at a lower fixed rate, regardless of emissions. This policy made them cost-effective for drivers and employers, even for vehicles used partly for private purposes.

However, in the latest Budget, the government determined that starting April 6, 2025, double cab pick-ups will be treated as company cars rather than vans. This new classification will see them subjected to the same BIK rates as other company cars, which is often based on emissions and can vary widely based on vehicle specifications​.

Impacts on Benefit-in-Kind (BIK) and Income Tax

The BIK tax rate for company cars is generally much higher than the fixed rate applied to vans. As a result, employees who currently drive double cab pick-ups will see an increase in their BIK tax, which will, in turn, raise their income tax liability.

For instance, if a double cab pick-up like a Ford Ranger has a list price around £48,000 and CO2 emissions over 170g/km, it could fall into the 37% BIK tax bracket. Under these conditions, a 40% taxpayer could expect an additional annual liability of over £7,000. This marks a considerable increase from the current fixed BIK rate of approximately £3,960 for vans​

National Insurance Contributions

The changes don’t just affect employees; employers will also feel the impact through increased National Insurance Contributions (NICs) on company cars. Since double cab pick-ups will be treated as cars, their associated BIK tax will be higher, and employers will need to pay NICs based on this adjusted BIK value.

This means that the costs for businesses operating fleets that include double cab pick-ups will increase, impacting their bottom line. Additionally, the reclassification affects capital allowances and deductions from business profits, potentially reducing tax benefits available to businesses purchasing or leasing these vehicles.

Capital Allowances and Transitional Provisions

To ease the transition, the Budget includes certain temporary provisions. For example, if a company purchases or leases a double cab pick-up before April 2025, it may continue to use the current tax treatment until the lease ends, the vehicle is sold, or until April 2029—whichever comes first. This transitional arrangement provides a grace period for fleets to adjust and evaluate alternatives, especially given the shift in capital allowance treatment for these vehicles after April 2025​.

The Government’s Rationale and Future Implications

This tax change aligns with the government’s ongoing efforts to clarify the classification and tax treatment of vehicles used for both business and personal purposes. The decision also builds on legal precedents, such as the 2019 Coca-Cola case, in which HMRC successfully argued that certain vehicles—similar to double cab pick-ups—should be treated as cars rather than commercial vehicles. This ruling influenced HMRC’s assessment of what qualifies as a van versus a car, prompting the recent reclassification.

Beyond the immediate tax implications, this move signals a broader push to streamline vehicle tax policies, potentially guiding businesses toward adopting more tax-efficient alternatives, such as electric vehicles. The Budget also continues to support EV incentives, which may prompt companies to consider electric vans as replacements for double cab pick-ups.

How Should Businesses and Employees Respond?

The reclassification requires that both employers and employees evaluate their fleet strategies and personal vehicle choices to manage the increased costs. Companies may consider moving toward fully electric vans or other low-emission vehicles to take advantage of their favorable tax rates and reduced BIK tax. Similarly, employees might benefit from discussing tax-efficient vehicle options with their employers, as well as consulting a tax advisor to understand the potential implications of these new rules.