Employers: HMRC’s round-about on Double Cab Pick-Ups
This is for employers who provide directors or employees with a Double Cab Pick-Up.
What’s the news?
HMRC has completed an entire round-about of announcements on the topic of Double Cab Pick-Ups (DCPUs). During the recent Autumn Budget, HMRC announced that most DCPUs will again be classed as cars for taxable benefit purposes from 6 April 2025.
What’s going on?
Whether a DCPU is a car or van for tax purposes, followed the VAT definition such that vehicles with a payload of 1 tonne or more were regarded as vans.
However, HMRC have now stated that from 6 April 2025, the primary purpose of the vehicle will determine how its treated for income tax purposes. As most DCPUs don’t have a primary purpose as they are suited to convey both passengers and goods, they will be treated as cars for calculating the benefit charge.
Transitional benefit in kind arrangements will apply which means employers who have purchased, leased, or ordered a DCPU before 6 April 2025, will still be able to apply the previous benefit in kind treatment until the earlier of the disposal, lease expiry, or 5 April 2029.
What does this mean for employers?
These changes will increase the benefit amount on which an employee will pay tax, and employers will pay Class 1A National Insurance Contribution (NIC) which is also being increased to 15% from 6 April 2025.
Where the employer provides fuel for private travel, the company car fuel charge will also apply. This is significantly higher compared to the company van fuel rate and unlike the van fuel charge, there is no relaxation for insignificant private use.
These changes will be of particular concern to the construction, agricultural and forestry sectors who use these vehicles to transport both goods and people.
Crunching some numbers
Under current rules, a DCPU that qualifies as a van which is available for private use and the employer provides all fuel, could expect the following income tax and Class 1A NIC liabilities:
| Benefit Type | Benefit value |
Employee Tax due (higher rate 40%) |
Employer Class 1A NIC due (13.8%) |
| Company Van | £3,960 | £1,584 | £547 |
| Company Van fuel | £757 | £303 | £104 |
| Total | £4,717 | £1,886 | £651 |
However, compare this to a similar vehicle from 6 April 2025, the expected income tax and Class 1A NIC liabilities are:
| Benefit Type | *Benefit value |
Employee Tax due (higher rate 40%) |
Employer Class 1A NIC due (15%) |
| Company Car | £20,350 | £8,140 | £8,262 |
| Company Car fuel | £10,286 | £4,114 | £1,543 |
| Total | £30,636 | £12,254 | £9,805 |
*assuming a list price of £55,000 and the highest emission % applies.
What can employers do?
Assessing your current fleet of DCPUs to identify whether the company van or company car benefit rules apply will be key.
When existing DCPUs are replaced, employers may want to think of providing alternative vehicles which attract lower benefit in kind values. A van with the main purpose to transport goods or electric DCPUs may become attractive.
How can Crowe help?
At Crowe, our employment tax specialists can guide you through the changes and assess the impact on your business. We can also help you with putting in place changes to your company vehicle policies and company van offering.
Additionally, our HR Advisory specialists can support with employment contract matters relating to the provision of company vans.
If you would like any further information regarding the above or would like to discuss the potential support we could provide, please do not hesitate to contact Preet Bahia.
