Businesses and employees need to act fast to get ahead of the removal of a tax break for double-cab pick-ups which could leave them up to £8,000 worse off, a leading West Midlands accountancy firm has warned.
Popular vehicles such as the Nissan Navara and Ford Ranger have historically been classed as commercial vehicles by the government, meaning they have enjoyed significant benefit-in-kind (BIK) tax breaks.
The previous government had announced plans to reverse this tax break, but performed a screeching U-turn following a backlash from industries including logistics and farming.
However, from the start of April 2025, the new government has reintroduced the rule which will see them reclassified as cars – a move which was hidden in the small print of the 2024 Autumn Budget.
The changes come in from April 1 for corporation tax purposes and April 6 for income tax purposes – so anyone renewing leases and taking delivery of a new double cab before then will still benefit from four more years of the current rules.
Analysis carried out by Paislei Godley, an associate director at Prime Accountants Group, says the change could be worth as much as £8,000 per vehicle, based on a cost from new of £33,500.
Paislei said that for a diesel Nissan Navara double-cab pick-up with an estimated list price of £33,500 and Co2 emissions of 248g/km, the total benefits in kind would be £4,717 if classified as a van.
The income tax due on this benefit would be £943 for a basic rate taxpayer or £1,887 for a higher rate taxpayer.
However, when the vehicle is recategorised as a car, the benefit in kind would be £22,681, costing a basic-rate taxpayer £4,536 and a higher-rate taxpayer £9,072 – before you even consider a fuel benefit for the company car as well.
This would mean an overall increase in the tax burden of £3,593 for a lower-rate taxpayer, and £7,185 for a higher-rate taxpayer.
Prime, which has offices in Birmingham, Coventry and Solihull, works with clients across multiple industries who benefit from the historic tax break, such as farming, construction and logistics.
Paislei said: “This tax break is one which historically I’ve encouraged people to take advantage of, particularly if they work in an industry where they need a vehicle bigger than a regular car but smaller than a Transit-size van.
“The new rules are something of a double-whammy – a significant increase in taxation for employees, plus a reduction in the tax breaks available for businesses.
“Action is needed before March 31, so if you’re renewing your double cab, you need to do it all and take delivery before then to benefit from another four years of the old rules, giving you time to make a decision on what vehicle is next.”
Paislei said that employers also stand to lose out under the new rules, as it will lead to significant increases in National Insurance contributions.
Based on Paislei’s calculations, the current cost to the company for a double-cab pickup classed as a van would be £144 in Class 1a National Insurance contributions.
Under the new rules a Class 1a contribution will rise to 15 per cent on that benefit, taking it to £3,402 per year.
“It’s a big increase for companies just from changing from van to car treatment,” added Paislei.
“Also, the change means first year allowances cannot be claimed at 100 per cent under the capital allowances regime on the cost.
“As cars with such big CO2 emissions, it means only six per cent writing down allowances will be allowed going forward, which will be costly for businesses.”
For more information, search for Prime Accountants Group on social media.
