OUR INSIDE SCOOP ON EIM23150
At OVMS, we've been keeping a close eye on recent updates from the UK Government on the classification of double cab pick ups and their tax treatment.
We grabbed some time with our MD, James, to get his take on the developments.
THE UK GOVERNMENT'S TAXATION POLICY ON PICKUP TRUCKS
For many businesses and sole traders, a company car is considered a perk of the job. For tax purposes, they’re not – in fact, double cab pick ups over one tonne are considered to be goods vehicles rather than cars, making them eligible for a type of tax known as benefit in kind (BIK). On February 12th 2024, HMRC decided to unveil new legislation which changed the rules on double cab pick up trucks (DCPUs) - which would lead to drivers paying thousands of pounds more in tax to the UK Treasury
UNDERSTANDING THE DOCUMENTATION
THE NEW TAX TREATMENT OF DOUBLE CAB PICK UPS
The new guidance would no longer interpret double cab pick ups over one tonne as a commercial vehicle, and would be classified as a car. This aligns with the UK government's wider aims to close every supposed "tax loophole" in the tax system, in this case specifically on benefit in kind purposes. The motoring industry and wider farming industry were unsurprisingly, disappointed in this legislation - as it would inadvertently harm farmers and others in rural areas who rely on the capital allowances that commercial vehicles afford.
These types of vehicle are also favoured by tradespeople, owing to the rugged nature of double cab pickups. We’ve seen multiple businesses around us choose DCPUs for this reason, and they’re an major part in their daily lives .
UNFORESEEN BACKLASH: THE FALLOUT FROM THE REDEFINITION
Drivers, employees and employers alike pushed back against the new legislation, as the yearly finance bill to double cab pick up drivers would increase by orders of magnitude. Rural areas and farming industries in particular would suffer, with more of their funds going towards their vehicle rather than their businesses, which are often close-cut on their bottom line.
THE REVERSAL: A HASTY CHANGE ON DOUBLE CAB PICK UPS
Within a week, HMRC noted the objections to the new legislation from the farming and wider motoring industry and backtracked. The resultant guidance update/ withdrawal of guidance from the government is already subject of major talk - and here at OVMS we're keeping aware of all the new developments.
LOOKING FOR YOUR NEXT DOUBLE CAB PICK UP OR COMMERCIAL VEHICLE? VISIT OUR DEALERSHIP OFF THE A303 AND SPEAK TO OUR HELPFUL TEAM.
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