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The government announced a U-turn this week on HMRC’s decision to treat the popular ‘double cab pickup’ vehicle as a car rather than a van for tax purposes.

The double cab pickup has been a popular choice for trades people, property developers and farmers and has seen a number of traditional car drivers swap to it over the last few years because of the tax advantages they enjoy over standard internal combustion engine (ICE) cars.

The news, announced seven days ago (12 February), that HMRC would be treating these vehicles as cars rather than vans for tax purposes from the 1 July 2024 didn’t go down well.

Masum Ahmed, tax partner at McBrides Chartered Accountants, said: “The decision to U-turn on this has to be in light of election and the Government not wanting to be seen to be punishing the small business owner, if he or she has chosen a double cab pickup as their work vehicle. These drivers are sometimes seen as traditional conservative voters by the press, and by the Government, so to punish them wouldn’t be sensible at this point in the year, and just prior to an election campaign.”

It was announced on the 12 February that HMRC were taking the view that where a vehicle had no predominant suitability for carrying either passengers or goods the default should be that they were categorised as cars and would therefore become subject to much higher benefit in kind taxes where the business is run through a limited company.

Another possible side effect of this rule change would have meant that for capital allowance purposes, double cab pickups purchased after 1 July 2024 would no longer be eligible for a claim to Annual Investment Allowance or Full Expensing but instead have only been eligible for writing down at a rate of either 18% or 6%, dependent on CO2 emissions.

Masum Ahmed added: “Many of our limited company owner managers will be pleased to hear that the Government has executed a speedy U-turn on this unpopular potential rule change. It will be interesting to see what happens as we move towards the last Budget of this parliament on 6 March and whether more populist tax measures will be introduced.”

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McBrides Chartered Accountants