From the tax year beginning April 2025, double cab pick-ups will no longer be treated as commercial vehicles and instead be classified as cars for the purposes of capital allowances, benefits in kind, and some deductions from business profits.
Income and Corporation Tax
Currently double cab pickups attract 100% capital allowances in the year of purchase under the Annual Investment Allowance. This means the full cost can be deducted from trading profits when calculating income or corporation tax liabilities.
However, from April 2025, this will reduce to only 6% per annum under writing down allowances (18% for vehicles with CO2 emissions less than 50g/km), in line with the current tax treatment of cars.
Although this change will not affect the deductions against profits available over the entire period of ownership of the vehicle, it removes the benefit of receiving immediate relief in full in the year of purchase.
As an example, for a corporate entity purchasing a new vehicle for £40,000 from April 2025 onwards, the change in treatment would be:
| Deduction against profits | Reduction in corporation tax @ 25% | Deduction against profits | Reduction in corporation tax @ 25% | Change in tax | |
| Year 1 | £40,000 | £10,000 | £2,400 | £600 | (£9,400) |
| Year 2 | – | – | £2,256 | £564 | £564 |
| Year 3 | – | – | £2,121 | £530 | £530 |
| Year 4 (say sold for £20,000) | (£20,000) | (£5,000) | £13,223 | £3,306 | £3,306 |
| Overall | £20,000 | £5,000 | £20,000 | £5,000 | No change |
For unincorporated businesses (sole traders and partnerships), the deductions available against profits would follow the same treatment as in the example above. However, the tax saved would be dependent upon the individual’s marginal rate of income tax in each specific year.
- an amount of expenditure (ie deposit) is incurred on a contract to purchase entered into before the rule change on 1st/5th April 2025
- the expenditure is incurred by 1st October 2025
- the vehicle is available for use by 1st October 2025
P11D
For incorporated entities, currently double cab pick-ups do not give rise to a taxable benefit where private use of the vehicle is insignificant. Under the new classification as a car, a taxable benefit arises where the vehicle is available for any level of private use, even if insignificant.
Income Tax is payable by the employee or director on the value of the benefit in kind at their marginal rate of income tax (20%/40%/45%). The employer will be liable to pay Class 1 A National Insurance at 15% on the value of the benefit plus the fuel benefit, if fuel is provided for private purposes.
Transitional arrangements will apply for employers that have purchased, leased, or ordered a double cab pickup before 06/04/2025, whereby they will be able to rely upon the previous treatment until the earlier of disposal, lease expiry or 05/04/2029.
The below example illustrates the tax and National Insurance costs, comparing the current rules with the new rules, based on:
- Ford Ranger costing £40,000 with CO2 emissions of 230g/km
- Insignificant private use
- Fuel provided by employer
- Higher rate taxpayer
| Current rules | New rules (2025/26) | |
| Value of Car Benefit | Nil | £14,800 |
| Value of Fuel Benefit | Nil | £10,434 |
| Income Tax Payable by Employee | Nil | £5,920 |
| Class 1A NIC Payable by Employer | Nil | £1,565 |
| Total Annual Tax Cost | Nil | £7,485 |
However, under transitional arrangements, the existing rules will still apply where the vehicle is purchased, leased or ordered before 6th April 2025.
VAT
There is no change to the VAT treatment of double cab pick-ups. Provided the pick-up has a payload of 1 tonne or more, it is considered a goods vehicle for VAT purposes and input VAT can be reclaimed according to the normal rules.
Suggested action
If you are already considering the purchase of a new double cab pick-up, it would be advisable to make arrangements sooner rather than later. This should ensure you are able to place an order before April 2025 and receive delivery pre-October 2025, taking advantage of the more favourable current tax regime.