TTR Barnes

The UK tax landscape for commercial vehicles changed significantly in April 2025, particularly affecting the classification of double cab pick-ups/combi vans and the tax reliefs they attract.

Historically, double cab pick-ups used in a business context benefited from the tax rules applied to commercial vans. These rules included more favourable Benefits in Kind (BiKs) rates, eligibility for VAT reclaims and generous capital allowance deductions. However, from April 2025, the landscape has shifted, with most double cab pick-ups now being treated as cars for tax purposes, resulting in higher tax costs for employers and employees alike.

If you are a business owner, fleet manager or employee who has been impacted by Double Cab Pick-Up Tax Changes 2025 and not yet acted, please do read our guide for what you should know and how you could remain as tax efficient as possible, despite the reforms.

When a business provides a vehicle, its tax treatment is determined by whether HMRC classifies it as a commercial vehicle or a car. This classification directly influences VAT recovery, Capital Allowances and BiKs taxation, particularly when the vehicle is used for both business and private journeys.

Vans are often more financially attractive to a business than a car due to the tax reliefs they attract as commercial vehicles.

1. VAT Relief:  Car vs. Van

For the purposes of VAT, a car is defined as follows by HMRC:

“…any motor vehicle of a kind normally used on public roads, which has 3 or more wheels and either:

• is constructed or adapted mainly for carrying passengers
• has roofed accommodation to the rear of driver’s seat that’s fitted with side windows or that’s constructed or adapted for the fitting of side windows.

Exceptions to this are:

• vehicles that can only carry one person – or able to carry 12 or more people including the driver
• caravans, ambulances and prison vans
• vehicles of not less than 3 tonnes unladen weight
• special purpose vehicles such as ice cream vans, mobile shops, hearses, bullion vans and breakdown & recovery vehicles
• vehicles with a payload of one tonne or more”

Usually, reclaiming VAT on company cars is prohibited, unless they are used solely for business purposes and that can be proved.  Exemptions to this are allowed if they are classed as; automotive stock; taxis,; a driving instructor’s teaching car; or pool cars (under very strict conditions).   Rules are very strict on personal use for cars, including travelling between work and home – a key litmus test is that the car “must not be available” for private use – for example written into employment contracts or vehicle insurance conditions omitting personal use.

The VAT rules are different for commercial vehicles that do not classify as cars – including vans – in that some personal use is permitted on a “de minimis” basis and the full VAT amount can still be claimed.  Even in the instance of more significant personal use, input VAT can still be reclaimed proportionally, or via mechanisms such as the Lennartz principle.

VAT on fuel exclusively used for business purposes can also be reclaimed – or a 100% VAT claim is possible with a fuel scale charge to cover private use.

2. Capital Allowances Relief:  Car vs. Van

If a vehicle is classified as a van, businesses may claim 100% tax relief under the Annual Investment Allowance (AIA) in the first year of ownership.

For cars, only writing-down allowances apply, with rates based on CO2 emissions as follows:

• 0g/km (new cars only): 100% first-year allowance
• ≤50g/km: 18% writing-down allowance
• 50g/km: 6% writing-down allowance

Under the CA23510 HMRC guidance for the purposes of Capital Allowances, a car is defined as:

“…a mechanically-propelled vehicle other than:

• a motor cycle
• a vehicle of a construction primarily suited for the conveyance of goods or burden of any description, or
• a vehicle of a type which is not commonly used as a private vehicle and is not suitable for use as a private vehicle”

3. Benefits in Kind Charges:  Car vs. Van

Benefits in Kind (BiKs) is a tax applied to benefits or perks given by an employer that are in addition to salary. Company cars and vans are treated differently for the purposes of Benefits in Kind.

Current car BiKs rates
A car is assumed to be used for private use (including commuting) and the amount of BiKs paid each year is calculated using the list price of the car (P11D), the tax bracket of the user and the level of CO2 emissions associated with the car.  (The BiKs rate is lower for electric cars – currently 3% for 2025/25.)

n.b. Diesel cars registered after 1 September 2017 are not subject to the diesel supplement if their certified NOx emissions meet the Euro 6d standard.

Where the diesel supplement applies, the total benefit is subject to an absolute cap of 37%, rising to 38% in 2028–29 and 39% in 2029–30.

For the purposes of BiKs, a car is defined by HMRC as:

“A mechanically propelled road vehicle that is not:

• a goods vehicle (a vehicle of a construction primarily suited for the conveyance of goods or burden of any description)…this will include most commercial vehicles such as lorries, pick-up trucks or vans…note that the test is of construction, not use.
• a vehicle of a type not commonly used as a private vehicle and unsuitable to be so used
• a motor cycle as defined in Section 185(1) of the Road Traffic Act 1988
• an invalid carriage as defined in Section 185(1) of the Road Traffic Act”

For cars where fuel is also provided for personal use, HMRC applies a car fuel benefit charge.  Rather than calculating the actual cost of the private use fuel, an annual fixed-rate multiplier is applied to the car’s BiKs % rate to generate the sum of liability.  For 2025/26, the multiplier is: £28,200.

Example (2025/26):

• Car CO2 emissions: 160g/km
• Consequent vehicle BiKs rate: 37%
• Fuel benefit charge calculation: £28,200 × 37% = £10,434
• BiKs fuel tax payable: £2,086.80 (20% at standard rate tax payer) or £4,173.60 (40% at higher rate tax payer)

Current van BiKs rates

BiKs for vans are calculated differently to cars.  Instead of tax being calculated based on the vehicle’s % BiKs rate, a flat rate is applied, known as the Van Benefit Charge (VBC).  For 2025/26 this rate is £4,020.   The current Van Benefit Charge for zero emissions/electric vans is zero (£0)

As with cars, there is a BiKs fuel charge applied for personal fuel use paid for by the business.  This is known as the Van Fuel Benefit tax and is payable by both the employee and employee through Class 1A NICs.  It is a flat sum rather than a calculation.  For 2025/26 the van fuel benefit charge is £769 (plus tax consideration depending on tax bracket).  For zero emissions (electric) company vans no BiKs is currently levied on the electricity used for charging

Double Cab Pick-Up Tax Changes 2025: From April 2025, the government changed the guidance on how double cab pick-ups and combi vans are classified.  The primary purpose of the vehicle must now be identified as being the transportation of goods rather than passengers.

The identification of the vehicle’s intended purpose takes place using a new test, formulated by HMRC, to determine “whether the vehicle construction has a primary suitability for goods transportation.”

Given that most double cab pick-ups offer non-business features such as rear seating, four doors and added features for comfort and personal use, it is expected that most will be taxed as cars due to their dual-purpose nature of carrying both goods and passengers.

“Going forward, classification of double cab pickups (including variants such as extended, extra, king and super cab pickups etc) will…need to be determined by assessing the vehicle as a whole at the point that it is made available to determine whether the vehicle construction has a primary suitability as per the two-part test outlined at EIM23115 onwards. It therefore follows that from 6 April 2025 most double cab pickups are expected to be classified as cars when calculating the benefit charge. This is because typically these vehicles are equally suited to convey passengers and goods and have no predominant suitability.”  HRMC

Full guidance can be found in updated manual EIM23151.

The Classification Test

The holistic test set out by HMRC is one of construction not of use.  The test considers how a vehicle is constructed at the time it is assessed, not at the point of its original manufacture.  If modifications have been made then these are also taken into account during the test, which includes the following key stages:

• Identify the original manufactured form of the vehicle
• Establish if any modifications have been made
• If no modifications have been made, then test of primary use according to EIM23120 should be based on the vehicle construction at original manufacture
• If modifications have been made, the exact nature of modifications should be identified and assessment of whether they are sufficiently permanent and substantial to have altered the original manufactured construction of the vehicle. For example, slide-out rear seats with seat mountings and seat belt fixtures in place, plus temporary covers on rear side windows would be viewed as no altered construction, whereas permanent removal of the rear seats and all associated fittings plus replacement of glass side windows with permanent panels would be considered as altered construction.
• Apply test EIM23120 to either new or original construction, depending on outcome of whether the vehicle is considered to be altered.

The reclassification will undoubtedly have financial impact on those affected.

• Capital Allowances: Double cab pick-ups that no longer qualify as vans will not be eligible for AIA. Instead, they will be subject to writing-down allowances that depend on their CO2 emissions.
• VAT Relief: VAT rules remain unchanged. Double cab pick-ups with a payload over one tonne remain eligible for VAT recovery for VAT-registered businesses
• Benefits in Kind: Reclassified vehicles are now taxed as cars using current BiKs rates. This will likely significantly increase tax liability.

An example showing the financial impact of new rules for double cab pick-ups on BiKs charges:

* Based on double cab pick-up with list price of £40k and CO2 emissions of 160 g/km, giving a BiK rate of 37%.   Using calculation: (List price/P11D x Vehicle BiKs rate)* employee Income Tax rate.

Transitional Relief

If you leased or owned a double cab pick-up/combi van prior to 6^th April 2025 then HMRC has allowed for a transitional period, whereby the previous classficiation will continue to apply until either; the vehicle disposal; lease expiry; or 5^th April 2029 (whichever is earlier).  In these instances, proof of order must be available (e.g. deposit receipt, signed contract, dealer confirmation).

If you are continuing to use a double cab pick-up or combi van, there are still options to explore to maximise tax efficiencies:

1. Use Electric Vehicles (EVs)

• 2025/26 BIK for EVs remains low at 2%, increasing gradually to 5% by 2027/28
• 100% First-Year Allowance (FYA) available for brand-new EVs

2. Genuine Commercial Vans

• Consider adaption of your vehicle or a different vehicle type more akin to a van
• Vans with no rear seats and demonstrable goods transport purpose still qualify
• BiKs for vans remains flat-rate at £4,020 for 2025/26
• Fuel BiKs for vans also current flat rate of £769

3. Salary Sacrifice

• Still attractive for EVs and low-emission cars
• Can reduce Income Tax and NICs

If you’re just learning about the Double Cab Pick-Up Tax Changes 2025, here are some practical next steps:

• Review your fleet: Audit all double cab vehicles
• Assess usage: Can any DCPUs still meet the van test?
• Consider EVs or smaller vans: More efficient and lower tax
• Speak to your accountant: Tailored advice can reduce your liabilities

The 2025 changes to UK company vehicle taxation are significant, particularly for businesses relying on double cab pick-ups. With higher BiKs charges and reduced Capital Allowances relief, employers and employees alike must review their vehicle strategies. However, some opportunities do remain for smart planning, especially with electric vehicles and commercial van reliefs.

At TTR Barnes, we’re here to help you navigate these changes and ensure you stay ahead of the curve. If you have questions about your business vehicles, get in touch today.

Need help with your vehicle tax planning?  Contact us for tailored advice.

All information correct at time of going to print/live and on the best knowledge and understanding of the author at the time. This article is for general information only and does not constitute financial advice or recommendations for individual circumstances. No responsibility is taken for any actions taken on the base of the information within this article.