Double cab pick ups are perhaps not known for their tight turning circles, yet are now the subject of a very swift U-turn in government policy.
Only last week we reported that HMRC had finally, over three years after their victory in the Coca Cola case, clarified the tax treatment of double cab pick ups (DCPUs).
I feel like we should be used to government U-turns in this day and age but it is fair to say that the speed of this one caught the profession completely by surprise yesterday.
Last week’s new guidance stating that all DCPUs will be treated as cars for benefit-in-kind and Capital Allowances purposes was withdrawn yesterday, and the government have now stated that new legislation will be drafted to put the tax treatment beyond doubt.
So where are we now with all of this?
- Following this reversal in policy, DCPUs with a carrying capacity of at least 1 tonne will continue to be treated as vans for all tax purposes, in line with the long-standing VAT treatment.
- DCPUs with a carrying capacity of less than 1 tonne will continue to be treated as cars for tax purposes, also in line with the current VAT treatment.
- Other double cab commercial vehicles, such as the “crew cab” type vans, are still likely to be treated as cars in line with the Coca Cola decision, as they are deemed to be “multi-purpose” vehicles (meaning they are equally suited to the conveyance of passengers or goods) – the requirement for van treatment is that they are primarily suited to the conveyance of goods.
This is clearly good news for manual workers and farmers who rely on these vehicles for their businesses, and with an impending general election it seems the Government has moved fast to avoid causing a significant disadvantage to these industries.
While this is good news, it does call into question yet again how much confidence we can have when carrying out tax planning for business when decisions can be reversed so quickly. We are aware of traders who last week changed their investment decisions and bought different vehicles, only now to find that their original vehicle preference would have been fine after all.
It is encouraging that the government are going to amend tax law to include the definition of a van to include DCPUs that can carry over a tonne – this is long overdue. However uncertainty still remains over many other kinds of vehicles as the classification for tax is still not always straightforward as specific circumstances can affect the position.
Any businesses investing in new commercial vehicles should seek tax advice before investing as the tax cost of getting this wrong remains a significant one.
Contact James Geary or Rachel Roberts by emailing james.geary@randall-payne.co.uk or rachel.roberts@randall-payne.co.uk, or call 01242 776000.
See previous article: https://www.randall-payne.co.uk/expert-opinion/car-versus-double-cab-pick-up-tax-rules-are-changing/
