Pick-ups face huge tax hike as they lose commercial vehicle status

Double-cab pick-up trucks are set to lose their status as commercial vehicles when it comes to paying company car tax.

Massive changes to the benefit-in-kind (BIK) rules will mean that company car drivers will face a near-fivefold increase in personal tax bills for any such pick-up purchased from 1 July 2024.

Currently, any pick-up that meets the criteria of having a payload of more than 1000kg (or 1045kg with a hardtop installed) is considered a commercial vehicle.

This is in line with the current VAT rules, allowing business users to reclaim tax on vans and pick-ups.

From 1 July, HRMC will abandon the payload-based definition and deem any pick-up with a second row of seats as suitable for private use and therefore a car.

Due to favourable VAT and BIK taxation, the UK is one of the largest markets in Europe for pick-up trucks.

The Ford Ranger is the country’s best-selling example, with 18,679 registrations for a 45.5% market share in 2023.

The most popular Wildtrak variant with a 2.0-litre diesel engine has a basic list price of £47,220 including VAT. Under the new rules, its 230g/km CO2 emissions place it in the top BIK taxation group of 37%.

A 20% taxpayer in England will therefore have to pay £291 per month and a 40% taxpayer £582 per month in BIK tax for having it as a company car. 

This compares to a flat rate of just £60 per month for 20% taxpayers or £120 per month for 40% taxpayers at present.

There are exceptions that will mean any double-cab pick-up that's permanently modified to make it suitable for commercial use by removing the seats and fittings (as well as replacing the rear glass with fibreglass or metal panels) will still be considered as a commercial vehicle.

The rules won't be backdated to cover employees currently driving pick-ups as company cars, and any purchases, leases or orders placed before 1 July won't be subject to the new rules.

Owners will then have until the lease expires, the vehicle is sold or 5 April 2028 to continue to pay the existing BIK tax rates.

Of the pick-ups currently on the UK market, the KGM Musso, Maxus T90EV and Volkswagen Amarok don't offer a single-cab variant.