Tax for pick-up trucks is changing but there's more than one kind of tax to be aware of.
If you've already read our article on the tax you must pay for a van then you'll undersand the road tax implications. Broadly speaking those same fees for road tax are due for pick-up trucks as well.
As a commercial vehicle, the road tax for pick-up trucks is a flat rate. In order for it to be considered a commercial vehicle the rules in the UK dictate that a pick-up truck must be able to carry a payload of 1000kg - or 1045kg if it has an enclosed loadspace.
Road tax for light good vehicles under 3.5-tonnes is currently set at £320 per year. That's the annual fee you'll pay for having the pick-up truck on the road. If you're a private owner that's the only real tax obligation you will have to pay.
However, here's where it gets complicated. If you own your pick-up truck through a company - ie. you have it on a lease through a business or you have bought it outright as a Limited company - then you may have to pay an additional tax.
This additional tax is known as a Benefit In Kind (BIK). You pay BIK on a vehicle if you are using it for personal use - that includes commuting to work. If you simply have a work vehicle and you only use it to for work purposes - a farm pick-up truck used to move hay or livestock around could be an example of this - then this doesn't apply.
If though, you have bought a pick-up truck as a company vehicle to avoid paying more tax than you would than say having a conventional car or 4x4, then you're now in the government crosshairs.
From 1 July 2024 all pick-up trucks that are company cars and used for personal use, will now no longer be classed as commercial vehicles. Pick-up trucks will instead be taxed as company cars and subject to the normal amount of company car tax you have to pay for a car.
In the case of a pick-up truck - most of which have large engines and therefore fall into the top band of company car tax (which is based on CO2 emissions) - then you'll be paying 37% of the taxable value of the vehicle. Simply put, if your pick-up truck costs £50,000 then the taxable value is £18,500.
If you pay tax at 20% you will pay 20% of that taxable value - £3700 - per year in tax. If you pay tax at a 40% rate then you will pay £7400. That's a huge difference from the previous arrangement which for the 2023/2024 tax year was flat rated at a taxable value of £3920.
The Government has U-turned on its decision to tax double-cab pick-up trucks in the same way as passenger cars. Pick-up trucks with a second row of seats will continue to be treated as commercial vehicles when they meant the 1000kg payload requirement.
Pick up trucks will be subject to a new benefit in kind (BIK) company car tax under rules being introduced on 1 July 2024.
Double cab pick-up trucks currently enjoy a standard rate of company car tax when driven for personal use. As such they have become a popular tax workaround for savvy drivers looking to use them as personal vehicles while paying a minimal amount of company car tax benefit in kind.
Currently any double cab pick-up truck that has a payload of one tonne (1,000kg) or more is accepted as a van for the purposes of paying BIK. With the addition of a hardtop this threshold rises to 1,045kg making any vehicle with a payload greater than this effectively a commercial vehicle like a van. The one tonne threshold has therefore become a must meet requirement for manufacturers to sell in Britain. Consequently, registrations for pick-up trucks have been far higher than in other countries that don’t offer this generous tax break for pick-up trucks and vans.
The official wording is that: “From 1 July 2024, HMRC will no longer interpret the legislation that defines car and van for tax purposes in line with the definitions used for VAT purposes. This VAT approach for double cab pickups differentiated based on payload, with anything under one tonne classified as a car, and anything a tonne and over as a van.“
The new ruling makes mention of double cab pick-ups were no longer predominantly used for the carriage of goods, and as such should be treated as cars.
The notice on the gov.uk website goes on to explain that the “classification of double cab pickups will therefore need to be determined by assessing the vehicle as a whole at the point that it is made available to determine whether the vehicle construction has a primary suitability”. In other words has it been designed and purchased as a commercial pick-up or as a car.
Furthermore the statement adds:
“It therefore follows that from 1 July 2024 most if not all double cab pickups will be classified as cars when calculating the benefit charge. This is because typically these vehicles are equally suited to convey passengers and goods and have no predominant suitability.”
The ruling will come into force in July but there is a way around the new regulations. It says that in a transitional arrangement, those that have purchased, leased, or ordered a double cab pickup before 1 July 2024 will be able to continue with the current BIK rules. However, they will only last for as long as the vehicle is owned or until 5 April 2028.
The Ford Ranger is currently the best-selling pick-up in the UK and is ranked number four amongst all commercial vehicles. The Volkswagen Amarok has recently re-entered the UK market, and is built by Ford. Both pick-up trucks have models that are both over and under one tonne.
Tax for pick-ups is currently charged as a benefit-in-kind at £66 per month for those that are paying 20% BIK rate or at £132 per month at 40% BIK rate. This is the flat rate for 2023/2024 for commercial vehicles.
Company car tax, however, is based on CO2 emissions which will mean that fuel hungry pick-up trucks will likely be stung by a huge tax bill. Your average pick-up truck emits in the region of 250g/km. This places it in the highest possible company car tax band of 37%.
For a pick-up truck costing around £50,000 - the price of a mid-range pick-up with VAT - the BIK at 20% would be more than £3500 and at 40% more than £7000 per year.
The current rate for any commercial vehicle is a flat rate based on a nominal £3600 taxable BIK value which means that 20% taxpayers must pay £60 per month and 40% taxpayers a charge of £120 per month.
Last year in the UK the market for pick-up trucks was just over 41,000 units - a 38.7% increase on 2023 sales. It is not known how many of these were bought as company cars, but given the generous loophole it is likely the future market for new pick-ups could be considerably less.
In an amazing U-turn, HMRC abandons proposed increase to double-cab pick-up BIK tax just one week after announcing the changes above. Due to pressure from farmers and the motor industry, pick-up trucks will no longer be subject to a BIK tax.
There are two types of van road tax people pay on their vans - vehicle excise duty and personal tax.
You’ll likely be familiar with what most people refer to as road tax, but it's also known as vehicle excise duty (VED) which is the tax you pay to use the roads. You pay this once a year as a lump sum, every six months or monthly via direct debit.
How much is the tax on your van will depend on whether you want to pay it in one lump sum or by direct debit.
For 2022/2023 most vans will have to pay £290 in tax as a lump sum or, £159.50 as a lump sum for six months or £152.25 as a recurring six monthly direct debit. There’s also the option of paying £25.38 a month by direct debit, which will mean you pay £304.50 overall.
As with everything in life, though, there are some exceptions. These are based around what year the van was first registered with the key dates being before 1 March 2001 and then two periods of between 1 March 2003 and 31 December 2006 and between 1 January 2009 and 31 December 2010. This is because Euro 4 and Euro 5 vans pay slightly different rates (they’re actually the cheapest of all).
|Vans registered from 1 March 2001 (TC39)
|Road tax (VED) cost
|Euro 4 vans registered between 1 March 2003 and 31 December 2006 (TC36)
|Euro 5 vans registered between 1 January 2009 and 31 December 2010 (TC36)
|Registered before 1 March 2001 up to 1,549cc engine size (TC11)
|Vans registered before 1 March 2001 with larger than 1,549cc engine size (TC11)
The other type of van tax you might have to pay is personal tax, or a BIK (Benefit In Kind). This is a charge some employees will have to pay if they are allowed to use work vans for their own personal use.
Thankfully if you only use your van for business purposes you don’t have to pay, and if you are self-employed or a sole trader you won’t have to pay the company van tax either. It’s only if you’ve bought a van through your company, or if a company has given you a van and instructed you that you can use it for personal use. The Benefit In Kind (BIK) isn’t paid to your employer, but it goes to HM Revenue and Customs (HMRC), as it’s a tax that is proportionate to your salary.