double cab pickups 1 July 2024 onwards car not van

double cab pickups 1 July 2024 onwards car not van for tax purposes

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not sure if this is new news or not ? but looks like the concessions (eg we will follow vat treatment) with regard to car/van benefit charge that allowed the argumnet that its a van  ref double cabs (and presumably some other vehicle ?) is being removed.

 

https://www.gov.uk/hmrc-internal-manuals/employment-income-manual/eim23151

Replies (39)

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By Ruddles
13th Feb 2024 14:31

Good spot.

I wonder if it will also apply for capital allowance purposes - it would seem illogical not to, but HMRC don't appear to have updated that Manual.

As far as I know the 1 tonne payload test was specific to double-cab pickups (the new guidance refers only to those) with all other vehicles already being tested against the predominant purpose rule - which is what the Coca Cola (and other) cases hinged on. All they are saying is that double-cab pickups no longer deserve the preferential treatment, which I always thought was going to disappear at some point.

I dislike the inconsistency though - why should the treatment be different for VAT and tax purposes? A vehicle is either a car or it isn't.

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Replying to Ruddles:
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By paul.benny
13th Feb 2024 14:43

Ruddles wrote:
I dislike the inconsistency though - why should the treatment be different for VAT and tax purposes? A vehicle is either a car or it isn't.

+1

For now I'm prepared o give HMRC benefit of the doubt and assume they just haven't yet updated all the guidance.

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Replying to paul.benny:
By Ruddles
13th Feb 2024 14:55

As noted below, VAT treatment is not a consequence of HMRC's interpretation but of the legislative definitions.

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By DKB-Sheffield
13th Feb 2024 14:47

Yep... this has passed me by... thanks rmillaree!

I must say... it's about time too! I predict a mad rush to buy before 30/06 - and some significant marketing by vehicle dealers.

Thanks again!

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By FrankTax
13th Feb 2024 14:48

My assumption is that this relates to Capital Allowances too, "for tax purposes" I think mean income tax so BIK, capital allowances etc.

Just seems an odd disparity that VAT can still be claimed.

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Replying to FrankTax:
By Ruddles
13th Feb 2024 14:54

The reason (for now) for the disparity is that the 1 tonne payload test is laid down in the legislative definition of 'car'. Whereas it is easy for HMRC to change their interpretation for tax purposes, a change for VAT purposes will require an amendment to the legislation.

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Replying to Ruddles:
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By FrankTax
13th Feb 2024 15:18

Yes agreed. I wonder if a change in VAT legislation may follow as some point.
Might see a few less pickups at the school gates anyway.

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RLI
By lionofludesch
13th Feb 2024 14:56

Middle of a tax year.

Tax doesn't have to be taxing......

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By Southwestbeancounter
13th Feb 2024 14:58

Ooh thanks for that rmillaree!

That will affect a few of my clients and I wasn't aware of the changes either so thanks for pointing it out!

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By More unearned luck
13th Feb 2024 16:47

This is the logic of the Coke-Cola case that some commentators made at the time.

It would be interesting to know:
a) why HMRC took so long to come to this conclusion (for the last few years some employees have been driving around in vehicles that look like vans but are taxed as cars and others are driving around in vehicles that look like cars but are taxed as vans), and
c) Why the change takes effect mid-year.

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Ivor Windybottom
By Ivor Windybottom
13th Feb 2024 23:15

Now electric cars have stolen the pick-up's low tax BIK position I guess HMRC thought that no one would mind if they pulled the rug from under the pick-ups.

It's been obvious for ages that the tax treatment of pick-ups was incorrectly applied, but we all went along with HMRC as we try to save our clients some tax. HMRC should not have ever been allowed to use "policy" to interpret tax rules, but they are powerless to fix bad or loosely drafted legislation, such as the definition of a car or van.

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Replying to Ivor Windybottom:
By Ruddles
14th Feb 2024 08:53

I disagree that the tax treatment was incorrectly applied, it is more a case that the vehicles themselves have been wrongly used.

I have no problem with the concept of taxing those that see such vehicles as a way round the car BIK rules, but for many these vehicles are genuine work-tools in various industries, notably farming and construction. While potentially available for private use, having seen the state of many of them I seriously doubt that they would ever be used as such. I suppose that if the vehicle is genuinely used for nothing but the business in question the solution is to have an enforceable clause in the employment contract that prevents private use and/or to treat them as pool cars.

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Replying to Ruddles:
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By rmillaree
14th Feb 2024 10:19

I agree ref use I think the trouble is once you have that second row of seats behind the drivers seats. i suspect its probably almost 50/50 with these vehicles that half are pehaps used primarily for business lumping stuff and the second row of seats is just a convenience. Facts are though i suspect 50% of these double cabs are used by peeps not lumping stuff around and they primartily drive to and from work perhaps to client not lumping stuff and for private use and probably only have a double cab due to the fact hmrc pick up decent chunk of the tab.

A sensible middle ground here would be to look at the job done by the driver and perhaps grant an exemption where the vehicle is primarily used and vehicle is necessary to transport goods/equipment to site. As ever with hmrc sense wont come into it - so those using these vehicles as a van will be screwed over probably unfairly.

I suppose that if the vehicle is genuinely used for nothing but the business in question the solution is to have an enforceable clause in the employment contract that prevents private use and/or to treat them as pool cars.

That scenario has pretty much always failed with cars in the first place due to the way rules are written as things stand - so i suspect thats a non starter without tweeking the rules for the majority. Note theer is curent tweek ref emeregency vehicles so thats not to say tweek could not and should not be done.

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Replying to Ivor Windybottom:
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By rmillaree
14th Feb 2024 08:57

"but they are powerless to fix bad or loosely drafted legislation, such as the definition of a car or van."

If we take the viewpoint that the powers that be pay zero attention to what the head of hmrc advises - surely its their job (hmrc) to report back to the power that be to advise tax loss and poor legislation to try and effect change. So i dont think we can say they are powerless - more a combo of dumb and dumbe , ikf they dont shout loudly and when they do powers that be pay zero attention.

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By SteveHa
14th Feb 2024 08:45

I was alerted to this earlier, and I honestly fail to see what's changed. It's long been known that the definitions for VAT and for other taxes are not in accord, and since Coca Cola we have had better guidance of what is and isn't a van.

The only thing that seems to have changed is that HMRC have finally written down their view. It's their manuals, not the law.

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Replying to SteveHa:
By Ruddles
14th Feb 2024 08:56

SteveHa wrote:

The only thing that seems to have changed is that HMRC have finally written down their view.


Not so. HMRC's view has been written down for ages. What has changed is that view.
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Replying to Ruddles:
By SteveHa
14th Feb 2024 10:48

Ruddles wrote:

SteveHa wrote:

The only thing that seems to have changed is that HMRC have finally written down their view.

Not so. HMRC's view has been written down for ages. What has changed is that view.

It doesn't alter the fact that nothing has changed with any real consequence to anyone that applied the law as the courts have.

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Replying to SteveHa:
By Ruddles
14th Feb 2024 11:33

SteveHa wrote:

It doesn't alter the fact that nothing has changed with any real consequence to anyone that applied the law as the courts have.


I'm not disputing that, but regardless of whether HMRC's treatment was in accordance with the law/courts there is no escaping the fact that the accepted tax treatment of these vehicles, unchanged for 20+ years, is about to be fundamentally changed.

As I said, I have little sympathy for those that use them to get round the car BIK rules. But something needs to be done for those that use them for 'genuine' purposes eg carting straw bales, sheepdogs, machinery etc, with or without farm staff in the back seats, around the farm.

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Replying to Ruddles:
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By Open all hours
14th Feb 2024 12:04

Hill sheep farm client had to submit photographic evidence of livestock handling equipment in use as the final part of a grant claim.
Maybe we’ll need to send similar of the PickUp with future tax returns?

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Replying to Open all hours:
paddle steamer
By DJKL
14th Feb 2024 14:11

Years ago I recall a tax case re a farmer arguing he used a Bentley to transport pigs to market, Taxation magazine had a cartoon showing the car with a pig sticking its head out of the window (1980s/1990s?)

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Replying to SteveHa:
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By rmillaree
14th Feb 2024 11:32

"The only thing that seems to have changed is that HMRC have finally written down their view. It's their manuals, not the law."

imho it its a clear change hmrcs views were previously written down in the manual - hmrc had clearly communciated that certain vehicles were fine (as beijng vans) and having that fact confirmed in manuals - that was all that was needed for everything to be rubber stamped and authorised that its clearly qualifying van - from memory the coca cola case was an issue as they werent clearly qualifying so risk was being taken in that regard.

now that guidance is being updated its as simple as some vehicles that were deffo fine now not fine due to this update - its business as ususal for t=he more dodgy ones that didnt meet the clear criteria for being fine previously. Not how sure you can wrap this up as not being a change here unless i have faulty memory - to me its clear that vehicle that was beyond any problems is clearly now the opposite if it wsas previously rubber stamped by manual guidance. Hwck they even had an approved list of some these vehicles were vans cant get much better than that.

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By DKB-Sheffield
14th Feb 2024 12:20

Interestingly... the February Employer's Bulletin has just landed, and... no reference (that I can see on a skim read) of Double Cab Pickups. Nothing in Dec '23 or Oct '23 either.

Whilst I appreciate this is simply a bulletin of major considerations, I thought it may have had a mention (before the next publication in mid-April)?

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Replying to DKB-Sheffield:
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By rmillaree
14th Feb 2024 12:36

it deffo should have ben mentioned for peps that need to order van months in advance potentially its ridiculously poor form not to tell their customer they are going to be screwed over soon - typical hmrc no excuse for this absence whatever their excuse - relevant peeps in charge shoudl be isuing apology for their incompetence here. Perhaps they will say we need to prer this in advance and at time of finalising content theer was no apporved changes - they must have known changes were coming though so thats poor excuse qas they could have flagged up change is on the way - surely they must have known at least a month ago this change of tack was going to be announced very soon ?

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By tazmaniandevil
14th Feb 2024 14:01

For reference - CA23511 was also updated yesterday.

Confirms HMRC interpretation re CAs and transitional arrangements where contract entered into before 1 July 2024 and the expenditure is incurred on or after that date but before 1 January 2025.

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By Mallock
15th Feb 2024 18:52

There are going to be a lot of unhappy clients who do use these vehicles instead of a van because they are more comfortable to do longer distances. I have one client who does 30K miles a year taking goods to farms, often towing a trailer in all weathers. A rear wheel drive transit is not going to cut it. I can also see the dealers and manufacturers leaving the market/going out of business very quickly. This is going to have big ramifications to quite a few sectors who will rightly feel aggrieved.

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Replying to Mallock:
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By Open all hours
16th Feb 2024 08:32

Assume the manufacturers will replace the back seats with a secure storage unit and/or go back to 2 door trucks which have the benefit of longer beds.

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Replying to Open all hours:
By Ruddles
16th Feb 2024 08:36

Possibly. But that doesn’t change the fact that the market for the vehicles is likely to shrink considerably.

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Replying to Mallock:
the sea otter
By memyself-eye
16th Feb 2024 08:38

Agree - my son uses a Ford Ranger to tow a (big) catering trailer to festivals. Looks like Ford will have to come up with something that isn't a DCPU....like one of those dusty battered American flatbed trucks you see in old Hollywood movies

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By Ruddles
19th Feb 2024 18:22

Who would have thought that double-cabs could perform a U-turn so easily?

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Replying to Ruddles:
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By FactChecker
19th Feb 2024 19:17

https://www.gov.uk/government/news/update-on-hmrc-double-cab-pick-up-gui...
... so all I have to do (for whatever pet tax project appeals to me) is to find a suitable group to whom 'the government will listen carefully'.

But I doubt even the representatives of the 'farmers and motoring industry' expected that rapid a volte-face!
Mind you, in another stunning display of decisiveness, the decision of a few days isn't technically rescinded ... merely carefully kicked into the long grass for review later ('by which time hopefully it'll be someone else's problem').

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Replying to FactChecker:
By Ruddles
19th Feb 2024 20:14

But that ‘review’ is set to result in legislative changes that will set in stone the treatment as vans.

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By Mikejonesamberhill
21st Mar 2024 10:59

I have a client planning to do this:
Redundancy April 24/25 tax year £300k
Start sole trader business May 24
Business: property/handyman services
Buy an electric SUV for about £60k
Buy other equipment £5k
Gross income 24/25 estimated at £10k
Expected loss on business 24/25 £60k
Intention to claim relief £60k of £300k)
Gives 45% TR (£27k)
After year 1, he’ll sell car to wife £40k

All ok?

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Replying to Mikejonesamberhill:
By Ruddles
21st Mar 2024 11:08

I can't speak for anyone else, but I'm OK. Thanks for asking.

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Replying to Mikejonesamberhill:
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By DKB-Sheffield
21st Mar 2024 11:16

Not a question for in here really. 'Yes', 'no', or 'maybe' would be entirely inappropriate.

TBH...

... is there actually a business? £5K profit to cover the £5K (non-EV CAs) sounds doubtful?

... assume you've taken into account personal use of EV?

... assume £40K is indicative of MV if sale to spouse?

Sorry to ask but, are you an accountant/ tax adviser? Or, are you 'the client'. First time posting... and a question that any genuine adviser/ accountant would likely not be asking.

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Replying to DKB-Sheffield:
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By More unearned luck
21st Mar 2024 11:54

You mean "...is there actually a trade?" But it doesn't matter as if there was a trade it is clearly not one that is being conducted on a commercial basis. Having no intention to make a profit is a bit of a stumbling block when it comes to claiming sideways relief.

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Replying to More unearned luck:
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By DKB-Sheffield
21st Mar 2024 12:04

More unearned luck wrote:

You mean "...is there actually a trade?"

Yes... thank you, appreciate the correction MUL.

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Replying to Mikejonesamberhill:
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By DKB-Sheffield
21st Mar 2024 11:49

Incidentally... why have you 'hijacked' a thread on Double Cab Pickups... when your question relates to EV SUVs? The different CAs available, and the fact an SUV was always likely a car (subject to very minimal exemption criteria), would suggest it perhaps doesn't belong in this thread?

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RLI
By lionofludesch
21st Mar 2024 12:49

Sounds like "pre-arranged steps" to me.

Not to mention sales to connected parties, the apparent certainty of the valuation of the car, the doubt as to whether the business is genuine etc etc.

The size of the claim suggests that HMRC might - unusually for them - take an interest

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Replying to lionofludesch:
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By FactChecker
21st Mar 2024 16:18

... especially after they've read this portion of the thread!
[oops, didn't mean to say that out loud]

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