In the Autumn Budget 2024, the government has announced a raft of changes that will affect the provision of company vehicles.
Following a recent Court of Appeal judgement, the government will change how double cab pick-up vehicles (DCPUs) with a payload of one tonne or more are classified for tax purposes. Starting from:
- 1 April 2025 for Corporation Tax
- 6 April 2025 for Income Tax
DCPUs will be treated as cars for capital allowances, benefits in kind (BIK), and certain deductions from business profits.
Transition Period: If you purchase a DCPU before these dates, the current capital allowances treatment will still apply. Additionally, transitional benefit-in-kind arrangements will allow employers who purchase, lease, or order a DCPU before 6 April 2025 to continue using the existing treatment until the earlier of disposal, lease expiry, or 5 April 2029.
Current Advantage of DCPUs
Presently, when specific conditions are met, DCPUs enjoy favourable tax treatment similar to that of vans. This includes:
- Potential for 100% tax relief
- Reclaimable VAT
- Low benefit-in-kind tax
However, with the impending changes, businesses need to reassess the benefits. Those considering acquiring a DCPU from 6 April 2025 onward should evaluate whether obtaining such vehicles outside of the company may be more advantageous.
Company Car Tax Rates Update
The Autumn Budget has also provided clarity on company car tax rates up to 6 April 2030, offering employers and employees a clearer outlook for planning future vehicle-related decisions. This is particularly relevant for electric and hybrid cars.
Below is a summary of the rates covering electric and hybrid cars only:
You will note that in 28/29 there is a steep increase in the BIK relating to hybrid cars, as ever forward planning is key.
Speak to Experienced Company Car Tax Specialists
Johnston Wood Roach are Chartered Accountants and Chartered Tax Specialists based in Waterlooville. These changes may affect your current and future vehicle strategies for your business.
Our friendly and knowledgeable team is available to discuss how these updates might impact you. For tailored advice on your specific situation, please feel free to contact us at enquiries@jwraccountants.co.uk or call 02392 269977 to discuss further.
