HMRC Confirms Extended-Cab Pick-Pickups Will Face Company Car Tax Hike

HMRC Confirms Extended-Cab Pick-Ups Will Face Company Car Tax Hike

HMRC has confirmed that extended-cab pick-ups will be subject to the same company car tax increases as double-cab models from April 2025. This follows the update from the Autumn Budget we wrote to you about.

Initially, it was unclear whether extended-cab pick-ups would escape the tax rise, but HMRC has now closed that loophole. Both double-cab and extended-cab pick-ups will be reclassified as cars for tax purposes, meaning higher Benefit-in-Kind (BIK) charges for drivers of models such as the Ford Ranger and Toyota Hilux.

Currently taxed at a fixed Light Commercial Vehicle (LCV) rate, these pick-ups will soon be taxed based on CO2 emissions. Given their typically high emissions, company car drivers will see a significant jump in tax costs—from around £800 per year (for a 20% taxpayer) to over £4,000, depending on the vehicle.

Single-Cab Models Unaffected

Single-cab pick-ups will remain classified as commercial vehicles and continue to benefit from the fixed LCV tax rates, as they are considered primarily for goods transport.

Initially, it was hoped that extended-cab models, which offer reduced passenger space compared to double-cabs, might avoid reclassification. However, HMRC has ruled that any pick-up with four doors—regardless of size or design—will be treated as a car for tax purposes from April 2025.

A Shift from Payload-Based Classification

Previously, pick-ups were classified as commercial vehicles based on their payload capacity, with those capable of carrying one tonne or more considered LCVs. However, a legal case involving Coca-Cola and HMRC led to a shift in classification criteria. The government responded by setting out new rules in the Autumn Budget:

"The government will treat double cab pick-up vehicles (DCPUs) with a payload of one tonne or more as cars for certain tax purposes. From 1 April 2025 for Corporation Tax, and 6 April 2025 for income tax, DCPUs will be treated as cars for the purposes of capital allowances, benefits in kind, and some deductions from business profits."

What This Means for Businesses

The reclassification has broader implications beyond BIK tax:

• Reduced Capital Allowances – Previously, businesses could claim up to 100% of a pick-up’s cost in capital allowances. From April 2025, this will be limited to just 18%.

• Expense Deductions – The change may also restrict how vehicle expenses can be deducted from business profits.

Key Exemptions and VAT Rules

The tax hike will only impact company-owned vehicles available for personal use. VAT reclaim rules remain unchanged, meaning businesses purchasing double-cab pick-ups with a payload of 1,000kg or more will still be able to reclaim VAT.

Employers who purchase, lease, or order a double-cab pick-up before 6 April 2025 will not be affected immediately. They will continue under the current tax rules until the vehicle is sold, the lease ends, or 5 April 2029—whichever comes first.

With just over a year before the changes take effect, businesses and company car drivers should carefully consider their options.

For more details on how these changes might affect your business or personal tax situation, don’t hesitate to reach out for personalized advice. And remember, if you’re planning to order a new vehicle, now is the time to act to lock in the current tax rates!

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