Main pick-up truck tax adjustments launched to shut loophole

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The federal government has introduced a serious change to the taxation for double cab pick-up vehicles that can see them classed as automobiles from July.

Double-cab pick-ups have grown considerably in recognition in recent times as their dual-purpose attributes have meant they’re appropriate for being a working car in addition to for private use. Many have additionally chosen them for the tax breaks they provide, as any double cab that had a payload of greater than a tonne was thought-about a van, and due to this fact attracted far cheaper firm automobile tax.

Nonetheless, HM Income and Customs (HMRC) quietly introduced yesterday (February 12) in a notice that it will change from July 1, 2024, saying that it’ll ‘now not interpret the laws that defines automobile and van for tax functions in step with the definitions used for VAT functions’.

HMRC says it’ll now assess the classification of every car of this sort on a person stage, however says that from July 2024 ‘most if not all double cab pick-ups will probably be categorized as automobiles when calculating the profit change’. HMRC says it is because these automobiles are ‘equally suited’ to each transporting items and likewise passengers.

Firm car tax relies on profit in variety (BIK), which on automobiles is a share based mostly on their CO2 emissions that takes into consideration a car’s record value. It favours electrical and hybrid automobiles, which emit decrease CO2.

Nonetheless, presently, pick-up vehicles are charged at a flat price which is £3,960 for the 2023/2024 tax yr. For a 20 per cent taxpayer, van BIK is £792 per yr, or £66 a month. For 40 per cent taxpayers, it’s £1,584 per yr, or £132 a month.

However beneath these adjustments, pick-ups will turn out to be considerably costlier for firm automobile tax, as a result of it’ll now be calculated based mostly on their typically-high CO2 emissions. A Ford Ranger – the UK’s hottest pick-up, and the fourth best-selling ‘van’ within the UK final yr – has CO2 emissions of greater than 200g/km, placing it within the highest BIK tax bracket of 37 per cent.

In response to Skilled Pickup, from July 2024 a driver utilizing a Ford Ranger Wildtrak 2.0 as an organization automobile will face a tax invoice of £290 a month, or £580 a month for a better price taxpayer. It means a driver might find yourself spending £5,376 extra on firm automobile tax per yr beneath these new guidelines, making a double cab pick-up uneconomical to run, and prone to trigger demand for these automobiles to fall.

Any new double cab pick-ups ordered or leased till June 30, 2024, will nonetheless qualify for the present decrease tax charges, even when they aren’t registered by July. Single-cab pick-ups are unaffected by these adjustments.