A screeching U-turn on tax breaks for double-cab pick-ups could be worth thousands of pounds a year to businesses, according to a leading West Midlands accountancy firm.

The government recently announced plans to treat double-cab pick-ups as cars for taxation purposes, only to row back on the decision seven days later after a heavy backlash from multiple industries.

Prime Accountants Group associate director Paislei Godley has crunched the numbers on the tax break and said it could be worth as much as £8,000 per vehicle, based on a cost from new of £33,500.

Paislei said that for a diesel Nissan Navara double-cab pick-up with an estimated list price of £33,500 and Co2 emissions of 248g/km, the total benefits in kind would be £4,717 if classified as a van.

The income tax due on this benefit would be £943 for a basic rate taxpayer or £1,887 for a higher rate taxpayer.

However, if the vehicle was recategorised as a car, the benefit in kind would be £22,681, costing a basic-rate taxpayer £4,536 and a higher-rate taxpayer £9,072.

This would mean an overall increase in the tax burden of £3,593 for a lower-rate taxpayer, and £7,185 for a higher-rate taxpayer.

Prime, which has offices in Birmingham, Coventry and Solihull, works with clients across multiple industries who benefit from the historic tax break, such as farming, construction and logistics.

Paislei said: “By taking away the tax efficiency it would have hit certain industries hard, especially people who rely on vehicles commercially.

“The issue with these vehicles is they can carry passengers and in the eyes of HMRC this would therefore not be a commercial vehicle.

“It’s a hugely beneficial tax break for individuals where they can pay only a few hundred pounds per year in tax, compared to a figure which would have increased massively under the new rules. In addition, the company would also have paid more National Insurance on the increased benefit.

“The government didn’t foresee the consequences for the people actually using the vehicles, but it’s across the board – construction, manufacturing, engineering, logistics – there was huge scope for it to harm many types of businesses.”

Paislei said the tax benefit is one she encourages people to take advantage of, as it works well for businesses who perhaps need a bigger vehicle but not something as big as a Transit van.
“The tax payable would be in the hundreds of pounds, but under the new rules it would have turned into thousands of pounds,” she added.

“It’s a good example of the wide range of rules and regulations that we need to stay up to date on for our roles as expert advisors, as legislation can often change which has a direct impact on our clients.”

For more information on Prime Accountants, visit https://primeaccountants.co.uk.