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Double-Cab Pick-up Trucks offer great Company Tax Benefits

Thanks to some kind BIK (Benefit-in-kind) tax rules and VAT options, it seems that some savvy drivers are choosing double cab pick-ups for their company vehicles.

4x4 pick-ups such as the Ford Ranger, Isuzu D-Max, Mitsubishi L200, Nissan Navara, Toyota Hilux and VW Amarok are all finding favour with customers looking to save money yet car manufacturers such as Fiat, Mercedes and Renault are planning to get themselves a piece of double-cab action for themselves in the near future.

Sure; they are big and impressive, as well as being tougher and stronger than ever, but are they a practical option in the city? 

It seem that the latest options available in the pick-up market are, as manufacturers pick up on the fact that image and practicality are starting to be important bedmates. Maybe this is part of the reason that double cab pick-ups are now stuffed full of comfort, high-end technology and luxury options that you would normally only find in an executive car, as well as being able to off-road with ease.

And when you combine this image and practicality with the tax advantages that the Government has allowed, the number of company car drivers considering and choosing a double-cab pick-up are on the increase as they choose to ignore the initial unwieldiness you confront when driving one instead of a conventional car, and replace it with a bit more money. 

Technically taking the rough with the smooth in more ways than one, let's take a look at what the tax rules and regulations are that customers are taking advantage of thanks to an excellent article in Auto Express.

The Tax Advantages

What does a pick-up need to be?

You can't just choose any pick-up truck to take advantage of the HMRC tax rules for double-cab pick-ups. HMRC has set down the rule that a double-cab must have a payload of at least one tonne in order to be classified as a Light Commercial Vehicle - which is why Pick-ups are found on Nationwide Vehicle Leasing's website as Van Leasing options.

With this in mind, you need to make sure that if you choose a pick-up that has a removable hardtop cover, you will need to ensure that the weight of the top doesn’t take your chosen truck’s cargo capacity below the one tonne limit, or else the regular company car tax rules come into effect. 

If the pick-up is a two-seater, it is automatically classed as an LCV, but as a company car, and a prestige status symbol, not really practical, but it seem that all of the big 4x4 pickups from the major manufacturers have been designed to pass the HMRC payload threshold - even with a hardtop.

What are the tax benefits for both employees and employers?

Being classed as an LCV brings tax benefits to both employees and employers in the shape of very favourable Benefit-in-Kind rates for drivers, substantial VAT refunds, and the opportunity for companies to write off the full purchase cost against tax. 

As an employee and not a company director, Benefit-in-Kind rates covering personal use of the company vehicle outside work are reduced, thanks to the lack of an emissions sliding scale when it comes to double-cab pick-ups.

Company car BIK taxation rates are calculated and charged as a percentage of the vehicle’s purchase price, with that percentage linked to CO2 emissions. Larger cars obviously emit more pollution (electric cars and hybrids excepted), but with double-cab 4x4 pick-ups there is a fixed BIK rate that, for 2016/17, is set at just £3,170.

That means a 20% taxpayer would hand over £634 to HMRC to use their company pickup as personal transport, while a 40% taxpayer will have to cough up £1,268.

When you compare these figures to those involved in large cars such as the Audi A6 Avant 2.0 SE Ultra (£3,224 annual tax bill for 40% taxpayer), Land Rover Discovery Sport 2.0 TD4 SE (£3,104) and the Ford Mondeo Estate 2.0 TDCi Titanium (£2,409) - all great executive choices - you can see the savings on the tax bill.

When it comes to VAT and Capital Allowance benefits, "all Light Commercial Vehicles – including double-cab pickups – qualify for VAT reclaims, as long as the business that purchases the vehicles is VAT registered." The claimable amount depends on the balance between personal and business use, with all business mileage VAT allowance reclaimable.

With company CARS, VAT reclaims are only allowed if the car is 100% for business - unless purchased for use as a taxi, driving school, private hire, or other limited exceptions. As driving to work from home is not considered as business use by HMRC, anyone who drives to and from work would lose the business the opportunity to reclaim any VAT at all, but in a puck-up this would affect only a percentage.

Pickups that are purchased by a business qualify as ‘plant and machinery’ and are therefore eligible for writing-off against Capital Allowances in the first year, whereas as the write-off rate for company cars could be as low as 8% per year.

Obviously, this is just a guide to the advantages of double-cab pick-up use as a company car, and you should check all the ins and outs of this with an accountant before proceeding. As Auto Express state at the end of their article, "it is the responsibility of individuals and businesses to understand the rules and regulations [of taxation] and act accordingly. As personal and business circumstances can vary so widely, it’s vital that anyone considering swapping their company car for a pick-up should take professional accounting advice."

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