Government U-turns on plan to close VAT loophole on double-cab pick-ups

  • HMRC announced last week plan to reclassify double-cab pick-ups as cars
  • It would have closed a loophole and hiked up taxes for many drivers
  • But government has U-turned after consulting with farmers and the car industry

Time 8:30 am, February 20, 2024

HMRC has scrapped plans to class double-cab pick-ups as cars just a week after announcing the move.

The authority quietly announced on February 12 that it would close the ‘loophole’ that allowed double-cab pick-ups that can carry payloads over 1,000kg to be classed as goods vehicles for tax purposes.

It said that from July 1, 2024, ‘most if not all double-cab pick-ups will be classified as cars when calculating the benefit change’ due to these vehicles being ‘equally suited’ to both transporting goods and passengers.

Owners of these vehicles were set to face significantly higher tax bills as a result.

Professional Pickup calculated that from July 2024 a driver using a Ford Ranger Wildtrak 2.0 as a company car would face a tax bill of £290 a month, or £580 a month for a higher rate taxpayer.

It meant a driver could end up spending £5,376 more on company car tax per year under the rules.

However, just seven days on from announcing the plan, the government has U-turned and has confirmed it will not be introducing the change.

In a statement, HMRC said it had ‘listened carefully to views from farmers and the motoring industry on the potential impacts of the change in tax-treatment’.

It added that the plan would not be ‘consistent with the government’s wider aims to support businesses, including vital motoring and farming industries’.

Double-cab pick-ups will continue to be treated as goods vehicles for tax purposes.

Double-cab pick-ups that can carry a payload of less than 1,000kg – such as the Ford Ranger Raptor – will also continue to be classed as cars as before.

Nigel Huddleston, financial secretary to the Treasury, said: ‘We will change the law at the next available Finance Bill in order to avoid tax outcomes that could inadvertently harm farmers, van drivers and the UK’s economy.’

The original decision to re-classify double-cab pick-ups was due to a ruling in the Court of Appeal that declared multi-purpose vehicles such as pick-ups are passenger cars.

In 2020, HMRC won a case against Coca-Cola over the classification of five-seater vans.

It meant that the tax ‘loophole’ owners of pick-up trucks had previously enjoyed was questioned.

James Batchelor's avatar

James – or Batch as he’s known – started at Car Dealer in 2010, first as the work experience boy, eventually becoming editor in 2013. He worked for Auto Express as editor-at-large and was the face of Carbuyer’s YouTube reviews. In 2020, he went freelance and now writes for a number of national titles and contributes regularly to Car Dealer. In October 2021 he became Car Dealer's associate editor.

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