The double cab pick-ups (DCPUs)used by many small business owners became subject to different tax rules as of April 2025. Popular DCPUs include the Ford Ranger, the Isuzu D-Max and the Toyota Hilux.
These handy vehicles combine the cabin space of a four-door car with the load-carrying capacity of a work horse pick-up. This versatility means many owners use them as family transportation as well in the course of their businesses, and HMRC is now subjecting them to the same business in kind (BIK) rules as company cars that are used outside work. The BIK system is a way of HMRC obtaining tax revenue from benefits obtained through work, such as private use of a company car, that it considers have a financial value.
What has changed?
Before April, DCPUs with a payload of 1,000kg or more that the driver used outside his or her business (dual use) went on the flat rate(BIK) goods van rate of £3,960. This meant £3,960 was added to the driver’s taxable income and this sum was then taxed at the 20% basic rate or 40% higher rate depending on the driver’s overall income.
Now DCPUs will be subject to the company car BIK rates.These have a number of bands based on vehicles’ carbon dioxide emissions, which range from 2% to 37%.
How are company car BIK taxes worked out?
Because of the CO2 banding some calculation is needed to work out how much tax is payable on a dual-use DCPU. Larger diesel engines tend to be fitted to DCPUs as the vehicles need high torque outputs to be able to cope with shifting a tonne of goods or hauling a trailer. This means their CO2 emissions are usually at or near the top 37% rate.
All vehicles are given a P11D value by HMRC. This is essentially the drive-away new cost of the vehicle minus the first registration fee and the first year’s vehicle excise duty but including VAT.
So, we can find out the annual tax payable for a basic rate company car driver with a £45,000 dual use DCPU on the top rate CO2 band of 37%as follows. P11D of 45,000 x 0.37 x 0.20 = £3,330.
For higher rate drivers the tax payable running the same vehicle as a dual-use company car would be £6,660 (45,000 x 0.37 x 0.40 =£6,660).
In addition, national insurance is payable on the BIK.
Electric and hybrid DCPUs
You are unlikely to spot one of these on the road. The only fully electric DCPUs currently available in the UK are made by Maxus, a brand of Chinese company SAIC Motor. These are on an ultra-low BIK rate of 3%, which will rise by 1% a year to 2028.
There is a wider choice of hybrid DCPUs but this is still a small market. Their BIK rates are lower than comparable petrol or diesel vehicles. For example, a Ford Ranger 2.3L plug-in hybrid has BIK rate of 19% incomparison with a three-litre diesel Ford Ranger, which emits 264g/km of CO2 and is on a BIK rate of 37%. The tax bill for the plug-in hybrid would work out about £1,500 a year less even though it costs about £10,000 more.
Fuel benefit
A dual-use DCPU was on the company van BIK rate of £757 in the last tax year. This was the extra amount in tax paid by the driver in exchange for charging fuel bills to the company.
Now that DCPUs are treated like company cars, drivers have been put on the car fuel benefit multiplier. For 2025-26 this is £28,200. This figure is multiplied by the percentage CO2 band the car is in and then again by the taxpayer’s marginal tax rate. The resulting figure is the annual tax payable in exchange for filling up at the company’s expense.
Drivers on lower mileages are not likely to find this benefit worth claiming and should pay for fuel themselves.
Company owners also have to pay national insurance contributions on car fuel benefit as HMRC deems it to be being given in lieu of salary.
Capital allowances
HMRC now treats dual use DCPUs the same as company cars with regard to capital allowances. Formerly owners could deduct some or all of the cost of the pick-up from profits before tax. Now DCPUs will go on company car rates, which vary between 6% and 100% depending on CO2 emissions.
The transitional period
People who bought, leased or ordered a DCPU before 6 April 2025 can stay on the former regime until they sell the vehicle or its lease expires, with a final cut-off of 5 April 2029.
VAT
No changes have been made to the VAT treatment of DCPUs. VAT-registered companies can reclaim VAT when buying a DCPU with a payload of more than 1,000kg.
Single and extended cab pick-ups
These retain their status as company vans as HMRC recognises their suitability for commercial rather than personal use. A single cab pick-up is the traditional style in which there are no rear seats, two doors and normally a longer load area. Extended cab pick-ups do have four seats and rear doors but the rear seats are not full-sized and the rear doors usually cannot be opened without first opening the front doors.
Why has HMRC made these changes?
Essentially tax authorities were forced to reconsider the status of DCPUs by a ruling in the court of appeal. In Payne vs Ors (2020),judges decided that DCPUs were not demonstrably more suited to either commercial or personal use so ruled they should be treated like company cars.
How much will drivers lose out by?
The short answer is a lot. Running a DCPU as a company car rather than as a goods van will cost drivers many thousands of pounds more,with higher rate drivers being hit hardest. They could easily end up paying another £8,000 or more a year in extra tax because of the changes.
Can I avoid the BIK changes?
This is possible but there must be no private use of the vehicle at all. HMRC would expect the keys and the vehicle to be kept at the place of work and for the insurance cover to exclude non-business use.
The changes to the tax treatment of DCPUs is significant,and many business owners will be considerably worse off as a result of them.However, there are choices that can be made to minimise tax liabilities.
For bespoke help and advice with responding to DCPUs’ new tax status or any other tax matter, please contact Finsbury Robinson. We are a full-service tax, accountancy and business advisory firm, and our friendly and highly experienced team is available on 020 8858 4303 or via email at info@finsburyrobinson.co.uk to answer all your questions.
