Budget Impact on Double Cabs

Have you heard the latest? This dramatic change for double-cab and fleet owners was tucked into the most recent budget and has been missed by many. Read on to find out how tax changes to double cab vehicles could affect you and your business…

The latest budget on 30^th October 2024, included a U-turn as far as double cab pick-up (DCPU) trucks are concerned. The autumn budget revealed that double cabs with a payload of one tonne or more, will now be treated as company cars for tax purposes. This will significantly impact the bottom line for fleet owners whose fleets include double cabs.

As of 1^st April 2025 for capital allowances for corporation tax, and as of 6^th April 2025 for benefit in kind (BIK) for income tax, the budget stated that DCPUs will be classified as cars. However, it’s worth noting that the current capital allowances will remain in place until 5 April 2029 for those who purchase, order or lease a double cab pick-up before 1^st April 2025.

This decision follows years of debate regarding the classification or double cabs, deciding whether they are a company car or a van.

So, what does this mean?

This will have a notable impact on tax treatment for businesses and employees who use these vehicles, particularly with them becoming emission based resulting in potentially large costs compared to the current arrangements. For those that have ‘no personal use’ vehicles the impact is less but the risk of not being HMRC compliant is now even greater. 

This change in direction also means that now would be a good time to evaluate your fleet and make the move on any vehicles that might need replacing in the next 12 months. Taking into consideration that the average manufacturer lead time is around six months, the clock is already ticking. Also worth considering is the fact that manufacturers are also under percentage share targets for electric vehicles, which increases in 2025, which could result in DCPU production becoming limited as they face fines for non-electric percentage share of registrations.

Please be aware that there is no change to the VAT treatment of double cabs. Vehicles with a payload of 1 tonne or more will continue to be classified as ‘goods vehicles’ as far as VAT is concerned, allowing VAT to be reclaimed as before.

There are however some transitional arrangements in place for employers that have already purchased a DCPU…

To ease the shift to the new tax rules, HMRC has introduced these transitional arrangements for employers who have already purchased, leased or ordered a DCPU prior to 6th April 2025. Under these arrangements, businesses can continue to apply the current (pre-2025) tax treatment on eligible vehicles until the earlier of the vehicle’s disposal, lease expiry or the date of 5th April 2029. This means that, for a period, companies with existing DCPUs will not face the new tax implications as long as they meet the criteria. For reference, the pre-2025 treatment is outlined in HMRC’s Employment Income Manual at EIM23150.

Below are some examples illustrating how these transitional rules apply to DCPUs made available to employees, specifically those vehicles not primarily designed for carrying goods:

• Example 1 – Employer A purchased a DCPU on 14th September 2025. Because the purchase occurred after 6th April 2025, the new rules apply, and this vehicle will be classified as a car, triggering a car benefit charge.
• Example 2 – Employer B leased a DCPU on 10th December 2024. As this lease was initiated before 6th April 2025, the previous tax treatment applies until the lease ends or until 5th April 2029, whichever comes first.
• Example 3 – Employer C initially purchased a DCPU on 10th January 2024, which was later traded in for a new model on 10th April 2025. The first vehicle remains under the old rules until the trade-in date. However, the replacement DCPU, acquired after 6th April 2025, is subject to the new classification as a car, resulting in a car benefit charge.
• Example 4 – Employer D placed an order for a DCPU on 5th January 2025, although the vehicle was not received until 2nd September 2025. Since the order was confirmed before 6th April 2025, the previous rules apply until the earlier of - disposal, lease expiry or the date of 5th April 2029.

Unsure exactly what impact this will have on you or your business?

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Then contact our team today and allow them to steer you around the bumps in the road that could be detrimental to your bottom line.