Following the UK Budget, HMRC has updated their guidance.
HMRC regard a Double-Car Pick-Up (DCPU) as a vehicle that normally has:
- A front passenger cab containing a second row of seats and capable of seating about 4 passengers, plus the driver,
- Four doors capable of being opened independently, whether the rear doors are hinged at the front or the rear,
- An uncovered pickup area behind the passenger cab, and
- A payload (carrying capacity) of 1 tonne or more
In the light of a 2020 Court of Appeal decision in Payne & Others (Coca-Cola) v HMRC, on 12 February 2024, HMRC issued guidance that said from 01 July 2024 the Income Tax treatment would regard DCPUs as cars instead of vans for the purposes of P11D declaration. However, on 19 February 2024, HMRC announced this guidance was to be withdrawn and this was referred to in the March 2024 Agent Update. Both advised that legislation would change the benefit-in-kind treatment from van to car at the next legislative opportunity.
Point 5.91 of the October 2024 UK Budget confirmed the tax treatment would change from 2025, HMRC’s guidance was updated, however, this is not included in the Finance Bill will be legislated by secondary legislation.
For Bookkeepers
For tax year 2024/25, a DCPU with a payload of more than one tonne is to be treated as a van. This changes from tax year 2025/25.
If you have clients with DCPUs in sectors such as the farming and / or motoring industry, this change from April 2025 will reflect the Court of Appeal ruling for Income Tax from 06 April 2025. From tax year 2025/26, DCPUs with a payload of more than one tonne will be treated as a car benefit-in-kind for the purposes of Income Tax and Class 1A National Insurance Contributions. Transitional arrangements will be in place where employers have purchased, leased, or ordered a DCPU before 06 April 2025 and they will be able to use the previous treatment, until the earlier of disposal, lease expiry, or 05 April 2029.
This also affects the Corporation Tax treatment from 01 April 2025. From this date, DCPUs with a payload of more than one tonne will be treated as cars for the purpose of Corporation Tax capital allowances. The existing capital allowances treatment will apply to those who purchase DCPUs before April 2025.
Whilst the preferential tax treatment as a van will disappear from April 2025, transitional arrangements will be in place and there is simplification in that, regardless of payload, a DCPU is a car for both Income and Corporation Tax purposes. Although, legislation will no longer align the interpretation of the terms ‘car’ and ‘van’ for these taxes with the definitions used for VAT purposes.
