Are you aware of the changes coming in from 1 July 2024?
UPDATE 20/02/24: THE RULES ARE NO LONGER CHANGING: Double Cab pickups: Government U-turn
HMRC are changing the way they interpret the rules, impacting those who use and/or provide double cab pickups for employee use.
Old way
The "old way" meant that for Employment Income purposes, HMRC defined a car and van in line with the definitions used for VAT purposes. The VAT approach generally treats double cab pickups, with a payload of over 1 tonne, as a van and anything under 1 tonne, is treated as a car.
In short, this mean it was considerably cheaper, from a tax perspective, to have a "company pickup" as opposed to a company car. Often saving thousands in Tax and National Insurance, when compared to a comparably priced "car".
What has happened?
From 1 July 2024, the classification will not be based on the vehicle payload. Instead, it will be determined by assessing the vehicle as a whole, at the point it is made available for use to determine whether the vehicle construction has a primary suitability of being a goods vehicle.
Making it highly likely that most, if not all, double cab pickups will no longer qualify as a van. Hence undoing the tax advantage they once held.
Why has it happened?
We are not overly surprised by HMRC's change of stance on this but it seems to have come about from a recent(ish) tax case (Coco-Cola v R & C Commrs (2020)). This case changed the way HMRC view things. It was decided that things should be viewed more narrowly, when it comes to defining a van and a car, it should not simply be concerned with the payload of the vehicle.
What does it mean for you?
If you already provide, or are an employee that receives, a company double cab pickup, then nothing changes straight away. You fall under the transitional rules whereby you can keep the old treatment until the earlier of disposal, lease expiry or 5 April 2028.
If you are looking to buy a new double cab pickup, you need to be aware of these rules and consider the timing of your purchase carefully.
If you want to know more about this, feel free to contact us.
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