Changes to Company Cars and Pickup Trucks from April 2025
From April 2025, company cars and pickup trucks will face higher taxes and stricter rules. For example, pickup trucks will be taxed like cars, and Benefit-in-Kind rates are increasing, meaning higher costs for many drivers. Here’s everything you need to know:
Benefit-in-Kind (BIK) Tax Increases
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From 6 April 2025, BIK tax rates for company cars will rise, affecting how much you’ll pay for using a company vehicle:
- Electric Vehicles (EVs): The BIK rate will increase from the current 2% to 9% by 2029/30, with a 1% annual rise.
- Vehicles with CO₂ emissions of 1-50g/km: Rates will rise from 2% in 2024/25 and 19% in 2029/30.
- Higher emission vehicles (>50g/km): Rates will rise by 1% annually, capped at a maximum of 39% by 2029/30.
How Much More Will You Pay?
Let’s take these two examples. These cars are popular choices for company vehicles, making them relevant for understanding the changes.
Electric Vehicle (e.g., Tesla Model 3)
P11D Value: £40,000
Current BIK Rate (2024/25): 2% – BIK Amount: £800
Higher Tax Bracket (40%) Annual Payment: £320
Future BIK Rate (2029/30): 9% – BIK Amount: £3,600
Higher Tax Bracket (40%) Annual Payment: £1,440
Difference in Tax Payments: By 2029/30, you’ll pay an additional £1,120 annually compared to 2024/25.
Petrol Vehicle (e.g., Vauxhall Corsa)
P11D Value: £22,000
Current BIK Rate (2024/25): 25% – BIK Amount: £5,500
Higher Tax Bracket (40%) Annual Payment: £2,200
Future BIK Rate (2029/30): 30% – BIK Amount: £6,600
Higher Tax Bracket (40%) Annual Payment: £2,640
Difference in Tax Payments: By 2029/30, you’ll pay an additional £440 annually compared to 2024/25.
For higher-emission vehicles, the increases will be more substantial due to their higher BIK rates.
What’s Changing for Pickup Trucks?
If you own a double cab pickup, you’ll now pay tax based on its value and emissions, which could significantly increase your costs. You’ll also lose tax perks like full capital allowances, making ownership more expensive. This means higher tax costs based on its value and emissions. This follows a Court of Appeal decision and impacts their tax treatment.
What Does This Mean?
- Higher BIK Rates: Instead of a flat commercial vehicle BIK charge (£3,960 in 2024/25), the rate will now depend on the vehicle’s value and emissions, leading to higher tax bills.
- Capital Allowances: Businesses will no longer be able to claim full capital allowances as they could for commercial vehicles. Standard car allowances will apply instead.
- Reduced Business Deductions: Tax-deductible benefits for pickups will now be aligned with cars, which could reduce profitability for businesses using them.
Your double cab pickup will be taxed like a car, costing more due to its value and emissions. You’ll also lose some tax benefits, like claiming full capital allowances, making it more expensive to run your vehicle.
Other Changes
- Vehicle Excise Duty (VED): From April 2025, electric vehicles will no longer be exempt. New EVs will pay the 1–50g/km rate in the first year and the standard rate thereafter.
- Fuel Benefit Charges:
- Van fuel benefit charge will rise to £769.
- Car fuel benefit multiplier will increase to £28,200.
Why Are These Changes Happening?
The reclassification of pickup trucks stems from a legal decision to align their tax treatment more closely with that of cars. This aims to close a loophole where high-value pickups were taxed less than equivalent cars, despite similar use cases.
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These changes could mean significantly higher costs for both employees and employers. If you’re driving a company car or using a pickup truck, now is the time to review your options. Consult a tax advisor to explore options like switching to lower-emission vehicles, restructuring your company car scheme, or using online tax calculators to identify savings.
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