HMRC surprised all taxpayers who own a double cab pickup as a company vehicle on 12 February by announcing that these vehicles would be classified as cars and not vans, which would have led to higher National Insurance Contributions (NICs) for owners.<\/p>\n
<\/p>\n
HMRC had initially confirmed that, from 1 July 2024, double cab pickups (DCPUs) with a payload of one tonne or more would be treated as cars for both capital allowances<\/a> and benefit-in-kind<\/a> (BIK) purposes.<\/p>\n However, due to a backlash from farmers and those in the motoring industry, the Government has reversed their decision.<\/p>\n In short, it means your National Insurance Contributions and income Tax position will stay as they did before HMRC introduced its current guidance.<\/p>\n There is no need to re-evaluate your choices, although it might be worth switching to an electric car (for example) if you wish to pay an even lower rate of tax.<\/p>\n HMRC announced it will withdraw the existing guidance based on an earlier ruling, which means DCPUs will continue to be treated as vans rather than cars.<\/p>\n For your DCPU to qualify as a van, however, you will still need a payload of at least one tonne.<\/p>\n If you have a business car which you use for private use, you will have to pay a BIK contribution.<\/p>\n Every car has a BIK band but, as an employer, your BIK rates will no longer increase whenever you choose to give this vehicle to your employee.<\/p>\n Your BIK payment rate is calculated based on the P11D value of your vehicle, its CO2 emissions, and your employee\u2019s income tax band.<\/p>\n Your employee will pay BIK tax on the car, but you will pay your National Insurance on the car\u2019s BIK value \u2013 this is currently set at 13.8 per cent.<\/p>\n As your vehicle will not be classed as a car, you can normally claim the full cost against your business taxable profits in the year of purchase by claiming the Annual Investment Allowance for Capital Allowances purposes.<\/p>\n Capital Allowances allow you, as a business, to write down your qualifying capital expenditure on plants or machinery against your taxable income.<\/p>\n Also, VAT reclamation on purchase price and running costs is possible, so long as you meet the specific conditions and limitations.<\/p>\n All vehicles used for business purposes can claim back 100 per cent of the VAT. As DCPUs vehicles are still classed as vans, which emphasises its purpose of being a goods vehicle, you might assume that its use is purely for your business.<\/p>\n However, this is not always the case and unless your DCPU is a \u2018pool\u2019 vehicle (e.g., used only for business purposes and kept at the business\u2019s property), VAT on the purchase price cannot be recovered.<\/p>\n The choice to reverse HMRC\u2019s decision means that the current tax opportunities for DCPUs remains unchanged.<\/p>\n Although HMRC reversed its decision, you might still want to consider switching to an electric vehicle.<\/p>\n Electric vehicles are entitled to Enhanced Capital Allowances (ECAs) which permit the deduction of the full cost from profits before tax.<\/p>\n This could result in significant savings, especially in your initial year of purchase.<\/p>\n Also, your electric vehicle will incur lower BIK rates compared to a petrol or diesel car.<\/p>\n This will reduce tax liability for employees if they use your business\u2019s car for personal use.<\/p>\n However, VAT paid on the cost of recharging your electric car and van cannot be recovered as normal input VAT.<\/p>\n The tax incentives offered are something you should consider as you will save money which could impact your business\u2019s finances.<\/p>\n Electric cars are also a benefit to potential customers \u2013 they show you are concerned with the environment and are looking to reduce your CO2 footprint.<\/p>\n If you use a vehicle for your business and want advice for your tax obligations, please get in touch with us today.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" HMRC surprised all taxpayers who own a double cab pickup as a company vehicle on 12 February by announcing that these vehicles would be classified as cars and not vans, which would have led to higher National Insurance Contributions (NICs) for owners.<\/p>\n","protected":false},"author":2,"featured_media":5585,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24,125,30,44,28,50,120,7,32],"tags":[],"_links":{"self":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5582"}],"collection":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/comments?post=5582"}],"version-history":[{"count":3,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5582\/revisions"}],"predecessor-version":[{"id":5588,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/posts\/5582\/revisions\/5588"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media\/5585"}],"wp:attachment":[{"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/media?parent=5582"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/categories?post=5582"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bainesjewitt.co.uk\/blog\/wp-json\/wp\/v2\/tags?post=5582"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}How will this affect me?<\/strong><\/h4>\n
How will this affect my business?<\/strong><\/h4>\n
Is it time to switch to an electric vehicle?<\/strong><\/h4>\n