Changes to Taxation on Double-Cab Pickups and the Employment Allowance – What You Need to Know Now

The Autumn Budget 2024 introduced significant tax changes that have come into affect for the 2025/26 tax year. These changes will particularly affect employers, fleet managers, and business owners who use double-cab pickups or rely on the Employment Allowance to reduce National Insurance (NI) liabilities.

Here’s what you need to know and what actions you should already be taking.

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🚘 Double-Cab Pickups: Tax Reclassification from April 2025

From 6 April 2025, most double-cab pickups will no longer be treated as commercial vehicles for tax purposes. This is a major change for businesses that have historically benefitted from more favourable tax treatment on these vehicles.

🔍 What’s Changing?

• Double-cab pickups will now be classified as cars for benefit-in-kind (BIK) and capital allowance purposes.

• This results in:

  • Higher BIK tax charges for employees using them personally.

  • Reduced capital allowances for businesses.

✔ What Stays the Same?

• VAT treatment remains unchanged — pickups carrying over 1,000 kg still qualify as vans for VAT purposes.

⏳ Transitional Rules

To reduce disruption:

• Pickups purchased, leased, or ordered before 6 April 2025 can continue to be taxed as commercial vehicles until:

  • Sold

  • Removed from the business

  • Lease expires (or at the latest, 5 April 2029)

✅ Action Required:

• If your business uses double-cab pickups, review your vehicle replacement schedule now.

• Consider purchasing or leasing before April 2025 to benefit from the more favourable transitional treatment.

• If offering pickups as part of employee remuneration, review BIK implications and communicate changes in advance.

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💷 Employment Allowance Increase: Boost for Employers in 2025/26

Amid rising employment costs, the government confirmed a major increase to the Employment Allowance from April 2025.

📈 What’s Changing?

• Employers’ National Insurance rises to 15% on earnings over £416/month.

• To offset this, the Employment Allowance increases to £10,500 per year (up from £5,000).

🛠 How Does the Allowance Work?

• The EA is a direct deduction from the employer’s NIC bill.

• If your business pays £1,000/month in employers’ NICs, the allowance eliminates NI for the first 10.5 months of the tax year.

✅ Who Can Claim?

• Most small and medium-sized businesses qualify.

• You must have at least one employee (not a director) earning above the NI secondary threshold.

• Not available to:

  • One-person companies with only director-employees.

  • Public bodies (unless mainly offering IT, cleaning, or security services).

  • Employers of domestic staff.

🔍 Key Point:

• Multiple director companies can still claim EA if at least one non-director employee earns over £5,000/year.

✅ Action Required:

• Check your eligibility now.

• Update payroll systems to apply the new EA limit from April 2025.

• If you’re growing your team, the increased EA could reduce your total NI burden and support recruitment planning.

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📌 Summary of What You Should Be Doing Now

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Final Thoughts

While the reclassification of double-cab pickups will mean higher tax liabilities for many, the increased Employment Allowance offers some welcome relief for eligible employers.

With just months to go before these changes fully take effect, now is the time to:

• Review your fleet and vehicle policies

• Audit your payroll for NI impact

• Maximise use of employment-related tax reliefs

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Need Help Preparing?

At Merranti Accounting, we assist businesses with:

• Tax-efficient vehicle planning and benefit-in-kind reviews

• National Insurance forecasting and Employment Allowance claims

• Compliance with HMRC’s evolving tax rules

📩 Get in touch for a consultation and make sure you’re not caught out by the April 2025 changes.