With the dust starting to settle around the Autumn Budget, we wanted to highlight the implications surrounding the somewhat masked changes to the taxation of Double Cab Pickup tax (DCPUs).
For many years, DCPUs have been treated as vans rather than cars for VAT purposes where, broadly, they have a carrying capacity of at least 1 ton. HMRC had allowed this treatment to also apply to the rules for both Capital Allowances and employment benefits.
In 2020, HMRC won a landmark tax case in the Court of Appeal against Coca-Cola, which concerned the tax treatment of certain DCPUs.
HMRC then proceeded to update their manuals in February 2024 to clarify that in line with the Coca-Cola case, DCPUs would be treated as cars from July 2024 onwards. However, within days this decision was “U-turned” by the Government after protests and with the imminent election.
The small print of the latest Budget has confirmed that DCPUs will now be treated as cars for the purposes of capital allowances, benefits in kind with some deductions from business profits. The measure comes into force from 1 April 2025 for Corporation Tax and 6 April 2025 for income tax. For vehicles purchased before April 2025, the existing capital allowances treatment will still apply and businesses who purchase, lease, or order a DCPU before 6 April 2025 will be able to use the current tax treatment until either the vehicle is disposed, the lease expires, or 5 April 2029, whichever comes first.
At BAGMA, we fully intend to protest this decision given the importance and use of these vehicles within the agricultural and groundcare industries, but with the legal case challenging the use of DCPUs back in 2020 which ruled in favour of HMRC, the chances of success are slim.
If you plan to bring forward the purchase of your DCPUs, you may want to speak with BAGMA’s service provider, Novuna Vehicle Solutions.
For any other concerns or questions, do not hesitate to contact us here at BAGMA.
