Diesel drivers could see car taxes increase five-fold as Rachel Reeves rolls out new system
Rachel Reeves says she will continue to support the purchasing of electric vehicles
GB NEWS
Drivers with larger diesel engines have been warned they could see their car tax contributions increase by more than five times next year, after changes were introduced in the Budget.
The warning comes as double-cab pickup owners face a dramatic increase in their benefit-in-kind (BiK) tax rates.
The changes form part of the Government’s tax overhaul which will now reclassify all double-cab pickups with a payload of one tonne or more as cars rather than commercial vehicles.
This marks the second attempt at implementing changes, following a similar initiative earlier this year in February which was ultimately reversed after significant backlash from the fleet sector.
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Diesel owners to be slapped with huge car tax increases next year
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The most substantial increases will particularly affect vehicles with larger diesel engines, which will fall into the highest BiK bracket under the new classification system, according to Fleet UK. Historically, double-cab pickups have enjoyed favourable tax treatment compared to standard company cars, making them an attractive choice for businesses across the UK.
Under the current system, these vehicles benefit from a fixed BiK rate, resulting in substantial tax savings for business owners and fleet operators.
The existing arrangement has made double-cab pickups particularly cost-effective for companies looking to provide vehicles that can serve both business and personal use purposes.
This preferential tax treatment has helped drive significant growth in the pickup truck market, which explains the strong opposition when similar changes were proposed earlier this year.
However the upcoming changes represent a fundamental shift in how vehicles will be taxed, moving them away from their "privileged position" in the tax system.
From April 2025, double-cab pickups will be subject to the same tax calculations as regular company cars, based on CO2 emissions and vehicle list price.
For diesel vehicles not meeting the Real Driving Emissions Step 2 standard, an additional four per cent surcharge will apply on top of the standard rates.
The new system will use a sliding scale of tax bands, with rates increasing based on CO2 emissions, ranging from three per cent for zero-emission vehicles up to 37 per cent for vehicles emitting 160g/km or more in 2025/26.
This represents a significant shift from the current commercial vehicle classification, potentially leading to substantially higher costs for businesses operating larger diesel pickups.
To ease the transition, the Government has introduced temporary arrangements for vehicles acquired before the April 2025 deadline.Businesses that purchase, lease or order double-cab pickups before April 2025 will be able to continue benefiting from the current BiK treatment for a limited period.
This transitional relief will last until either the end of the vehicle's lease, the sale of the vehicle, or April 2029 - whichever comes first.
The arrangement provides businesses with a window of opportunity to adjust their fleet strategies and plan for the upcoming changes.
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Car tax changes will come into effect in April next year
GETTYThis transitional period of up to four years offers some respite for businesses that act quickly to secure their vehicles under the current tax regime.
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