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UK Tax Authorities Reverse Decision on Pick-up Truck Taxation: Impact and Industry Response

March 26, 2024

UK tax authorities have reversed their decision to close a loophole that allowed pick-up trucks with a payload exceeding one tonne to be taxed as vans rather than cars. The announcement, made quietly on 12th February by HMRC, was swiftly followed by a retraction just one week later.

Originally, the proposal aimed to categorise pick-up trucks as cars, subjecting them to company-car tax based on CO2 emissions. Such a move could have seen costs rise by more than fivefold, potentially impacting the thriving pick-up truck market and burdening numerous small businesses and sole traders financially.

For approximately twenty years, individuals have enjoyed the privilege of running pick-ups as company cars, benefiting from significantly lower benefit-in-kind taxation compared to conventional passenger vehicles.

However, HMRC’s note EIM23151, released on 12th February 2024, signalled a plan to eliminate this tax break on all new pick-ups acquired, leased, or ordered from 1st July 2024.

The swift reversal came on 19th February, with HMRC stating, the government has considered feedback from farmers and the motoring industry regarding the potential consequences of the tax treatment change. Acknowledging the potential adverse effects on businesses and individuals, the government decided to maintain the status quo, preserving the existing tax system.

The classification of pick-up trucks has long been ambiguous, straddling the line between passenger cars and vans. Despite their popularity among farmers, self-employed individuals, and rural residents, HMRC contended that modern pick-ups, particularly double-cab variants with extended cabins, were increasingly used as private vehicles rather than work trucks. Consequently, HMRC sought to close the tax loophole for company car drivers.

Seeking to consult with one of our tax specialists? Contact us here.

Gary Olding

Gary is the National Head of Tax and overseas our Tax Compliance and Medical Tax Teams. When not dealing with clients he is supervising operations, troubleshooting, and optimising workflows.

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