Payrolling of Benefits in Kind and Double Cab Pickups

If you currently provide benefits-in-kind (BIKs) to your employees such as company cars or vans, medical insurance, gym memberships etc, then at the moment you have the choice to either declare the BIKs on forms P11D or include them in your payroll processing (known as payrolling of benefits).

It will become mandatory to process most benefits via the payroll with effect from April 2026.

Payrolling of benefits means that the employees have the relevant tax deducted from their pay across the year. Currently those employees will have tax collected via PAYE coding notice deductions which may not be entirely accurate or up to date and lead to tax demands or repayments once the tax year has ended.

Should you wish to register to payroll your benefits for the 2025/26 tax year then you will need to register online with HMRC before 5 April 2025.

We cover this in more detail in our article https://www.cliveowen.com/2024/12/mandatory-payrolling-of-benefits-it-is-just-over-a-year-away/

Double Cab Pick Ups

On 20^th February 2025 HMRC updated its guidance on the tax treatment of double cab pickups. From 6 April 2025, HMRC have stated that the tax treatment will change.

Going forward, classification of double cab pickups (including variants such as extended, extra, king and super cab pickups etc) will therefore need to be determined by assessing the vehicle as a whole at the point that it is made available to determine whether the vehicle construction has a primary suitability as per the two-part test outlined at EIM23115 onwards.

It therefore follows that from 6 April 2025 most double cab pickups are expected to be classified as cars when calculating the benefit charge. This is because typically these vehicles are equally suited to convey passengers and goods and have no predominant suitability.

The VAT input tax position remains unchanged.

Transitional arrangements will apply for employers that have purchased, leased, or ordered a double cab pickup before 6 April 2025, whereby they will be able to rely upon the previous treatment until the earlier of disposal, lease expiry, or 5 April 2029.  The position prior to 6 April 2025 remains unchanged.

For further information please go to :EIM23150 and EIM23151 – Car benefit: double cab pickups 6 April 2025 onwards – HMRC internal manual – GOV.UK

The VAT input tax position remains unchanged.