Government in major U-turn on pick-up truck tax changes

New rules that would have seen company car benefit-in-kind tax charges applied to double-cab pick-ups have been scrapped by HMRC a week after them being announced.

The shambolic U-turn follows HMRC’s decision to update guidance on double-cab pick-up trucks following a Court of Appeal judgement in 2020. Just last week, the Treasury announced that from 1 July this year double-cab pick-ups would no longer be taxed as goods vehicles, but would instead be classed as cars for the purposes of calculating capital allowances and benefit-in-kind (BiK) liabilities for drivers. The measure was supposed to close a perceived ‘loophole’, as the current good vehicle classification allows employees and company directors to benefit from private mileage in company-owned pick-up trucks while avoiding thousands of pounds of company car benefit-in-kind’ tax. 

Much of the popularity of increasingly powerful, luxurious and well-appointed pick-up trucks can be attributed to what amounts to major tax break for drivers, and the motor industry was among those lobbying against the HMRC move, saying it would be bad for business.

In an announcement today, the government says it has “listened carefully to views from farmers and the motoring industry” over the potential impacts of last week’s changes, and withdrawn the new guidance. This means that double-cab pick-ups will continue to be classified as commercial vehicles for BiK company car tax, according to the Treasury statement.
The government says it has acknowledged that its new guidance would have an effect “not consistent” with its broader objectives of supporting farmers and the automotive industry, although it makes no attempt to explain why this fact wasn’t clear last week when the changes were announced.

“We will change the law at the next available Finance Bill in order to avoid tax outcomes that could inadvertently harm farmers, van drivers and the UK’s economy,” said Nigel Huddleston, Treasury financial secretary.

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