Double Cab Pick Ups
Double Cab Pick Ups (DCPUs) are versatile vehicles popular among businesses for their dual functionality; they can be used both as a passenger and as a goods vehicle. Their classification affects how they are taxed and what tax benefits they can receive.
Traditionally, these vehicles have been treated as goods vehicles, offering owners beneficial tax treatments compared to regular passenger vehicles.
Ruling Changes
A court ruling had initially thrown this traditional view into question by suggesting that DCPUs might be classified as cars for tax purposes. This classification would have lead to higher taxes and reduced benefits for owners.
These potential changes caused concern among business owners who rely on these vehicles for their dual-use functionality.
However, HMRC has responded to feedback and decided to maintain the status quo. They confirmed that DCPUs would continue to be treated as goods vehicles, thus preserving the tax benefits associated with the classification.
Read the HMRC article here: Update on HMRC Double Cab Pick Up Guidance – GOV.UK
What Does This Mean for Your Business?
- Capital Allowances: Business owners ca continue to claim capital allowances on DCPUs. This tax relief helps reduce the net cost of acquiring the vehicle, as it allows a percentage of the cost to be deduced from annual profits before tax.
- Benefit-In-Kind (BIK) Taxes: Owners will not face increased BIK taxes, which are charged when employees use business vehicles for personal use. The favourable classification keeps these taxes at a lower rate, making DCPUs a cost-effective option for businesses.
- Legislative Assurance: HMRC plans to cement this treatment in the upcoming Finance Bill, providing long-term clarity and assurance for businesses.
The confirmation by HMRC to keep DCPUs classified as goods vehicles should come as a relief, ensuring continued financial benefits and adding in better business planning. This not only provides immediate financial relief but also stability in planning for the future use of DCPUs.
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