Recently, planned changes were announced on 12 February with regards to the treatment of double cab pickups (DCPUs). However, this has now been reversed (with the guidance being withdrawn), as confirmed by HM Revenue & Customs (HMRC) on 19 February, in response to recent backlash from the farming and motoring industries.
These planned changes were to treat DCPUs with a payload of one tonne or more as cars, rather than good vehicles/vans for corporation tax, capital allowances and benefit-in-kind purposes. This would have had a major effect and increased the benefits in kind for employees, as well as class 1A national insurance contributions due on employers for this benefit provided. Furthermore, it would have affected the full expensing and capital allowance position for corporation tax purposes.
The updated guidance came from a 2020 court decision, and the government has now acknowledged that this updated guidance was not consistent with their wider aims to support businesses.
Therefore, the reversal of the new guidance means that DCPUs, with a payload of over one tonne, will continue to benefit from the historic tax treatment of being treated as vans/goods vehicles and not cars.
It is believed that the government is to consult on draft legislation to ensure that DCPUs vehicles continue to be treated as vans/goods vehicles for tax purposes in the next available finance bill.
The above does not affect DCPUs with a payload of less than one tonne as they will continue to be treated as cars.
UHY firmly believe that the ability for the motor sector to plan and effectively facilitate change is fundamentally based on clear policy decision. In recent times we have seen the ZEV mandate shift, and uncertainty on the business in kind rates for specific EVs or Double Cabs does not promote confidence for buyers. We can only imagine the number of calls and hard work by vehicle admin teams, fleet vehicle departments, lease brokers and accountants, from concerned customers between the initial notice and the U-turn. Perhaps more consultation with the industry would assist in offering a clear direction for policy makers and allow the industry to work towards a shared, longer-term strategy.
The next step
For further information regarding this recent news on double cab pickups, please contact Fiona Wheeler on f.wheeler@uhy-manchester.com for benefits-in-kind purposes, and David Critchley on d.critchley@uhy-manchester.com for any corporation tax purposes.
