HMRC U-turns on double-cab pick-up tax hike

The Countryside Alliance welcomes news that HM Revenue and Customs has swiftly reversed a decision from last week that would have significantly increased the tax bills faced by drivers of company vehicles classed as double-cab pick-ups. These trucks feature an extended rear compartment and sometimes jump seats, and they had become popular with farmers both for their utility and because those capable of carrying loads of over a tonne, when operated as company cars, attract a lower rate of company vehicle tax. 

The issue arose from a ruling in the Court of Appeal from 2020 that, under the law as it stands, pick-up trucks should be classified and taxed as passenger cars. HMRC suggested last week that, from July, it would implement the change arising from the ruling so that the favourable tax treatment of this class of vehicle – their reduced calculated value as a taxable benefit in kind – would end. The effect would have been to swell the monthly tax bill they attract, in some cases by over four times.  

On Monday, however, HMRC suddenly reversed course and announced that the law would be changed so that the current arrangements could be maintained. The announcement reads:

“[T]he government has listened carefully to views from farmers and the motoring industry on the potential impacts of the change in tax-treatment. The government has acknowledged that the 2020 court decision and resultant guidance update could have an impact on businesses and individuals in a way that is not consistent with the government’s wider aims to support businesses, including vital motoring and farming industries.” 

The Financial Secretary to the Treasury, Nigel Huddlestone MP, added:

“We will change the law at the next available Finance Bill in order to avoid tax outcomes that could inadvertently harm farmers, van drivers and the UK’s economy.” 

The Countryside Alliance warmly welcomes the decision to reverse the pick-up tax hike. We agree with Alistair Carmichael MP that the original decision would have been a “terrible mistake”, and that a large rise in their tax bills is the last thing the farmers and crofters who rely on them need.