What’s all this about double cab pick-ups?
6th March 2024
Posted in Articles, Capital Allowances by Andrew Marr
Double cab pick-ups have been in the news (at least the tax news!) over the last few weeks. I must admit that I didn’t know what one of these was before a few weeks ago but now I know that it is quite a smart truck which seems to have all the functionality of a decent car – and that is why it has made the tax news. On 12 February HMRC updated its guidance on the tax treatment of these vehicles by announcing that they would be treated as cars rather than commercial vehicles for the purposes of capital allowances and benefit-in-kind (‘BIK’) purposes. This was supposed to apply to all vehicles ordered after 1 July 2024 with any that were ordered before being subject to the existing classification until April 2028.
Following a backlash from the motor industry, the Government withdrew its new guidance and reverted to the previous position. As a tax advisor and as somebody who shortly needs to change his company car, this reminded me that the BIK position on one of these double cab things may be quite attractive. I immediately googled “the best double cab pick-up” and found Autocar’s top 10 models with a slogan across the top declaring that “With cargo space, versatility and plenty of luxury features, today’s pick-up trucks have become great, tax-efficient alternatives”…
I ended up looking at the Volkswagen Amorok which came in at around £55,000, looked pretty smart and could be comfortably specced out.
Tax implications of a company Volkswagen Amorok
As this is classed as a truck (and will continue to be classed as one after the above U-turn) the taxable benefit is a flat £3,960 for the 2023/2024 tax year. This means that a 40% taxpayer will pay BIK tax of £1,584 for the benefit of having such a vehicle for the year. Had it been classified as a car then the BIK would have been based on carbon dioxide emissions. This would have given rise to a taxable benefit at 37% (the maximum rate) or £20,350, meaning that the 40% taxpayer would be liable for £8,140.
The capital allowance position for trucks is also better. If the Amorok had been classed as a car then the company would only have been able to write it down at 6% as part of the special rate pool. As a truck, it can usually be written off in the year of purchase under either the full expensing regime, or by utilising the £1 million Annual Investment Allowance.
Forbes Dawson view
The recent change to guidance and subsequent U-turn is a timely reminder that certain company vehicles can be provided with very low BIK rates. Over the last few years electric vehicles have been very much in vogue because of their very low BIK rates (currently only 2% of list price) but these are not for everyone. Anybody who has seen the queues at the Oxford Tesla supercharger could easily be put off the electric car option and for now it seems that the ‘luxury truck’ alternative is here to stay. They are great for golf trips too!…
