Fleet News

Pick-ups benefit from major change in VAT rules

HM CUSTOMS & Excise has introduced a major change in its VAT treatment of pick-up vehicles, including double cabs. The new definition will now classify pick-ups as vans rather than cars if they have a payload of more than 1,000kg.

The changes will effectively make double-cabs such as the Mitsubishi L200, Ford Ranger and Mazda B-Series 17.5% cheaper to acquire for VAT-registered companies - a saving of £2,951 on Mitsubishi's L200 4Life and £3,530 on the Mazda B-2500 4Action - although they will have to account for VAT on the vehicles' disposal price. The Inland Revenue, however, will maintain its ambiguous treatment of double-cabs, insisting that if the vehicles are used primarily for the transport of goods then they are vans, but that if they are used for carrying people then they are cars. This prevents company car drivers from cutting their benefit-in-kind tax bill by choosing a double-cab.

But if the Inland Revenue did adopt Customs' blanket definition of a double-cab as a light commercial vehicle (so long as its payload exceeded 1,000kg), it could stimulate massive demand among company car drivers for double-cabs that incurred benefit charges of just £500 (the flat rate figure applied to vans), rather than 35% of their list price (the BIK calculation for cars).

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