Starting from April 2025, significant changes will be made to the classification of vehicles for benefit-in-kind (BIK) purposes. These changes will primarily affect double cab pickups, which will now be treated as cars rather than vans. This shift will have notable implications for both employees and employers in terms of taxation and benefits.
Previous Treatment (Before April 2025)
Double Cab Pickups:
- Classification: Treated as vans if their payload capacity was at least one tonne.
- BIK Taxation: Fixed taxable amount for private use (e.g., £3,960 annually).
- Capital Allowances: Higher allowances as commercial vehicles.
- VAT Treatment: Full VAT recovery if payload was at least one tonne.
Cars:
- Classification: Always treated as cars.
- BIK Taxation: Based on list price and CO2 emissions.
- Capital Allowances: Lower allowances compared to commercial vehicles.
- VAT Treatment: Limited VAT recovery.
New Treatment (From April 2025)
Double Cab Pickups:
- Classification: Treated as cars.
- BIK Taxation: Based on list price and CO2 emissions.
- Capital Allowances: Lower allowances as they are now treated as cars.
- VAT Treatment: Limited VAT recovery.
Cars:
- Classification: No change, still treated as cars.
- BIK Taxation: No change, still based on list price and CO2 emissions.
- Capital Allowances: No change, still lower allowances.
- VAT Treatment: No change, still limited VAT recovery.
Transition Period
For double cab pickups purchased or leased before April 2025, the previous rules will apply until the earlier of disposal, lease expiry, or April 2029. This transitional arrangement allows businesses and employees to adjust to the new rules gradually.
Impact Comparison
Let’s compare the impact using real examples: a BMW 3 Series (car) and a Toyota Hilux (double cab pickup).
| Vehicle | List Price | CO2 Emissions | BIK Rate | Annual BIK Tax | Capital Allowances | VAT Recovery |
| BMW 3 Series | £40,000 | 120 g/km | 27% | £10,800 | Lower | Limited |
| Toyota Hilux | £35,000 | 200 g/km | 37% (from Apr 2025) | £12,950 (from Apr 2025) | Lower (from Apr 2025) | Limited (from Apr 2025) |
| Toyota Hilux (Before Apr 2025) | £35,000 | N/A | Fixed Amount | £3,960 | Higher | Full VAT Recovery |
Summary
- BMW 3 Series: Higher BIK tax, lower capital allowances, and limited VAT recovery.
- Toyota Hilux: Previously more tax-efficient with lower BIK tax and higher capital allowances. From April 2025, it will incur higher BIK tax and reduced capital allowances, similar to cars.
These changes will make double cab pickups less tax-efficient from April 2025, aligning their treatment more closely with that of cars.
