Drivers of larger diesel vehicles, particularly owners of double-cab pickup trucks, face a significant increase in vehicle tax from April 2025. Recent budget changes, spearheaded by Rachel Reeves, will reclassify these vehicles, leading to potential fivefold increases in benefit-in-kind (BiK) tax rates. This represents a dramatic shift in taxation policy, marking the second attempt at such reform after an earlier proposal was met with strong opposition from the fleet sector in February of this year.
The government's tax overhaul reclassifies all double-cab pickups with a payload of one tonne or more as cars, rather than commercial vehicles. This alters their tax treatment significantly. Previously, these vehicles enjoyed a favourable fixed BiK rate, offering substantial cost savings for businesses. This preferential treatment contributed to the popularity of double-cab pickups, making them an attractive option for both business and personal use. The change removes this advantage, placing them under the same tax structure as standard company cars.
The new system will calculate tax based on CO2 emissions and list price. The most significant increases will affect vehicles with larger diesel engines, pushing them into the highest BiK brackets. Furthermore, diesel vehicles that do not meet the Real Driving Emissions Step 2 (RDE2) standard will incur an additional four per cent surcharge on top of the standard rate. The tax bands operate on a sliding scale, starting at three per cent for zero-emission vehicles and reaching a maximum of 37 per cent for vehicles emitting 160g/km or more in 2025/26. This contrasts sharply with the previously favourable fixed rate enjoyed by double-cab pickups.
This fundamental change in tax classification will significantly impact businesses relying on larger diesel pickups. To mitigate the immediate effects, a transitional arrangement has been introduced. Businesses that purchase, lease, or order double-cab pickups before April 2025 will retain the current, more favourable BiK treatment until the end of their lease, sale of the vehicle, or April 2029 â whichever occurs first. This transitional period offers a four-year window for businesses to adapt their fleet strategies and prepare for the impending changes. However, the long-term implications for businesses reliant on this type of vehicle remain substantial. The government's aim is to shift away from what it perceives as the "privileged position" these vehicles previously held within the tax system.
The impact of these changes is expected to be widely felt, particularly amongst businesses utilising larger diesel pickups as part of their operations. The significant increase in tax liability will necessitate a reassessment of fleet management strategies and could potentially influence purchasing decisions in the coming years. While the transitional arrangement offers some short-term relief, the ultimate outcome is a substantial shift towards a more emissions-focused vehicle taxation model.
