“NFDA welcomes the decision by HMRC this week to reverse its plans to change the tax treatment of double cab pickups keeping residual values and demand levels as they have been over recent years” said Sue Robinson, Chief Executive of the National Franchised Dealers Association (NFDA) which represents car and commercial retailers across the UK.

HMRC has announced a reversal of its plans, announced last week, which would have seen double cab pickups classified as cars. Under the plans, from 1 July 2024, HMRC would have categorised vehicles based on whether the vehicle is most suitable for conveying passengers or goods from that date. Consequently, double cab pickups would have been seen as equally suited to convey passengers and goods.

From a tax perspective, this would have resulted in benefit-in-kind (BiK) charges becoming higher, subsequently leading to higher income tax and national insurance payments, as well as an increase on any associated fuel benefits.

However, with HMRC’s reversal announcement this week, the tax on the BiK will now not increase when employers provide these vehicles to their employees. Additionally, the capital allowances available in the first year of use will now not be reduced when a business purchases this vehicle for use in their trade.

As such, double cab pickups with a payload of one tonne or more will continue to be treated as goods vehicles for tax purposes. Double cab pickups with a payload of less than one tonne will continue to be treated as cars.

Sue Robinson added: “Double cab pickups represent one of the most prolific selling light commercial vehicles often favoured by the construction and agricultural industries and often acquired by self-employed contractors as a dual-purpose vehicle for business during the week and family use on the weekends.

“HMRC’s announcement last week to classify double cab pickups as cars rather than goods vehicles would have resulted in hefty benefit-in-kind charges which in turn would have led to higher income tax and national insurance payments. Overall, the decision would have significantly hiked up costs causing a considerable impact on the motor and other industries.

“HMRC’s decision to renege on this guidance and continue to maintain the status-quo is positive news for businesses and consumers who are particularly reliant on double cab pick-ups.”