Devastating Financial Impact of the Reclassification of Double-Cab Pick-Ups

Double-Cab Pick-Up Trucks No Longer Classed As Light Commercial Vehicles

The Autumn Budget has confirmed a seismic shift in tax policy: from April 2025, double-cab pick-up trucks with a payload of one tonne or more will no longer be taxed as light commercial vehicles but as company cars. This change will impose a massive financial burden on businesses that rely on these vehicles, with costs set to skyrocket for companies across the UK.

The decision marks a dramatic reversal following the previous government’s indecision. After fierce backlash from the commercial and fleet sectors, a prior budget proposal to treat double-cab pick-ups as cars was scrapped. However, the current government has now doubled down, with the Treasury confirming that businesses will face these higher taxes from April 2025.

The True Cost to Businesses

The new classification is expected to have a devastating financial impact, especially on small and medium-sized enterprises (SMEs) and self-employed tradespeople who rely heavily on double-cab pick-ups.

• Fivefold Tax Increase: The change means most double-cab pick-ups, typically equipped with large diesel engines, will fall under the top Benefit-in-Kind (BiK) tax rate of 37%. In practical terms, this will mean that a £45,000 vehicle will have a BiK of £16,650, which leads to a tax payer who is on the 40% tax bracket to pay £6,660 in additional tax every year.
• Increased Operating Costs: Companies that lease these vehicles will also bear significantly higher expenses. For businesses with fleets of double-cab pick-ups, the cumulative tax burden could cripple budgets, forcing them to re-evaluate their vehicle strategies.
• Limited Relief Options: Transitional arrangements offer limited respite. Businesses that purchase, lease, or order a double-cab pick-up before April 2025 can maintain current BiK rates until April 5, 2029, or until the vehicle is sold or the lease expires. However, this only delays the inevitable and applies solely to vehicles already in use.

Historically, double-cab pick-ups have been an attractive option for businesses due to their lower VAT and BiK tax rates. They allowed companies to benefit from the practicality of a utility vehicle without the prohibitive costs of a passenger car.

Now, that advantage is gone. The full weight of passenger car taxation will be felt, making these vehicles far less viable for many businesses.

What Are the Alternatives?

As businesses grapple with the impending tax hike, they’ll need to explore alternatives:

• Single-Cab Pick-Ups: These may retain their light commercial vehicle classification, offering a more cost-effective solution for certain tasks.
• Electric Vans and Trucks: Companies may be forced to shift to electric or hybrid options, although the impracticability of range and charging leaves this option for the few and not the many.
• Leasing Adjustments: Businesses may opt to downsize fleets to mitigate rising costs.

However, none of these solutions fully replicate the versatility and utility of double-cab pick-ups, leaving businesses to shoulder increased inefficiency and expense.

The reclassification of double-cab pick-ups as company cars represents a punitive shift for businesses. By targeting vehicles essential to tradespeople, small businesses, and fleet operators, the government risks alienating a critical segment of the economy.

For many companies, this isn’t just a policy adjustment—it’s a financial crisis. The question now is whether businesses can adapt in time.