New HMRC tax rule change could see drivers of certain vehicles pay extra £7,000
Owners of double-cab pick-ups are in for a shock as tax changes send bills soaring. Shifts in UK Benefit-in-Kind (BIK) tax rules mean these vehicles, previously classed as 'vans', are now taxed as company cars – thrusting tax liabilities skyward, with some drivers potentially facing an extra £8,000 annually.
Businesses are set to feel the pinch, and it's not small change; additional taxes could exceed £7,000 a year under the revamped system. Tax firm Finsbury Robinson said: "The changes to the tax treatment are significant, and many business owners will be considerably worse off as a result of them.
"However, there are choices that can be made to minimise tax liabilities." Earlier this year, car expert at Auto Traders cautioned that these reforms could see tax bills leap well over the £7,000 mark.
They explained: "Previously, the BIK for a 'commercial vehicle' like a pickup truck was fixed at £3,960 regardless of emissions or price.
"But from April, a high-priced double-cab pickup, a £50k Ford Ranger, for example, would fall into a 37 per cent BIK rate, meaning £3,550 in yearly tax for 20 per cent taxpayers, or just over £7,000 for people in the 40 per cent bracket."
The game changed with a 2020 Court of Appeal ruling, which determined that double-cab pick-ups weren't primarily designed for business use as previously assumed.
This verdict led HMRC to abandon the old one-tonne payload test that had categorised these vehicles as vans for tax purposes, reports Birmingham Live.
Before this, pick-ups were taxed at a fixed Benefit-in-Kind (BIK) rate of £3,960, irrespective of other considerations.
Under the revised regulations, taxation isn't based on the vehicle being classified as a van.
Instead, it's now dictated by the pick-up's carbon emissions - a shift that has significantly increased the tax load for many drivers.
This is particularly significant for those who drive diesel pick-ups, as a lot of these vehicles now fall into the higher emissions bands.
The shake-up affects popular double-cab pick-up trucks like the Ford Ranger, Isuzu D-Max and Toyota Hilux.
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