Date posted: 22nd Nov 2024
Back in February 2024, you may recall updates from us confirming that HMRC were going to treat double cab pick ups (DCPUs) as company cars, instead of commercial vehicles which follow the van benefit rules. Within a week, HMRC changed their mind and said that the previous treatment as commercial vehicles could continue and the van tax treatment would continue.
However, hidden in the Autumn budget statements was confirmation that DCPU’s will be treated as company cars going forward.
This will impact the personal taxes paid by the drivers of such vehicles and the tax reliefs available to the businesses providing such vehicles to staff.
It is anticipated that from 6 April 2025, DCPUs will be classified as cars when calculating benefits in kind. However, transitional arrangements will apply and allow the previous tax treatment to continue until the earlier of disposal, lease expiry or 5 April 2029. The transitional arrangements will apply for employers that have purchased, leased or ordered DCPUs before 6 April 2025 (may it be time to order a new one?). The HMRC manual at https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim23151 gives some situational examples.
From a business’ perspective, the ability to claim capital allowances will change, although again, transitional arrangements may apply. Commercial vehicles can qualify for the 100% annual investment allowance or full expensing (if they are brand new). Cars qualify for an annual writing down allowance of either 18% or 6% (depending upon CO2 emissions) on a reducing balance basis. Therefore the tax relief for a DCPU will be spread a lot more in the future. Again, the HMRC manual at https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca23511 has some specific examples.
As far as we are aware, the VAT treatment will continue as previously.
If you have any queries, please contact us.
