Following the Governments 2024 Autumn budget, it was announced that from 6 April 2025 double cab pick-ups with a payload of one tonne or more would now be treated as company cars, rather than as a company van resulting in increased reporting costs for both employers and employees.
However, HMRC published updated guidance (HMRC Employer Bulletin, February 2025) relating to a change in the interpretation of how double cab pick-ups should be classified for the purpose of the car benefit rules.
From 6 April 2025 HMRC will no longer be applying the payload test to consider if a double cab pick-up is suited for the conveyance of goods or burden. Instead, from that date, the classification of double cab pick-ups will be determined by assessing the vehicle as a whole at the point that it was made available to determine if the vehicle construction has a primary suitability as per a two-part test outlined in HMRC guidance.
The two-part test
Employers will need to look at the two-part test in order to:
• Identify the construction of the vehicle in the relevant year; and
• Consider if the construction is primarily suited for the conveyance of goods or burden of any description.
First limb of the test
The first part of the test considers:
• The original manufactured form of the vehicle.
• If no modifications have been made to the original manufactured form, it is necessary to move on to the second part of the test.
• If there have been modifications, the employer needs to identify the precise nature of the modifications that have been carried out. We look at whether the changes are substantial enough to alter the original manufactured construction of the vehicle.
• If the vehicle’s construction has been changed as result of the modifications, the second part of the test should be applied to the new construction.
• If the vehicle’s construction has not been changed the second part of the test should be applied to the original construction.
Second limb of the test
The second part of the test is to look at whether the original/new construction of the vehicle is primarily suited for the conveyance of goods or burden of any description at the point it is provided to the employee.
When looking at the word ‘primarily’ HMRC consider if:
• a vehicle may be able to fulfil more than one purpose; and
• makes it clear that a vehicle will only fall outside the definition of car in this context if it has the predominant purpose of carrying goods or burden.
Based on the two-part test HMRC expect that most double cab pickups will be classified as cars when calculating the benefit charge due to the dual purpose of the vehicle.
Transition provisions
There have not been any further changes to the transitional rules where the employer has:
• purchased;
• leased; or
• ordered before 6 April 2025
The transitional provisions will offer some comfort to employers as it will enable employers to rely on the previous treatment of double cab pick-ups up to 5 April 2025 until the earlier of disposal, lease expiry, or 5 April 2029.
HMRC will expect employers to maintain detailed records regarding the double cab pick-up vehicles they provide to their employees, especially when vehicles were ordered and what, if any, modifications were made to each vehicle.
For further information please contact a member of the Employment Taxes team at HaysMac.
