Drivers issued urgent warning of further car tax hikes launching within months despite major U-turn

It stated that following a Court of Appeal judgement, the Government will treat double cab pick-up vehicles with a payload of one tonne or more as cars for certain tax purposes.

From April 1, 2025, for Corporation Tax and April 6, 2025, for income tax, double cab pick-up (DCPU) vehicles will be treated as cars.

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As a result, the changes will be for the purposes of capital allowances, Benefit-in-Kind (BiK), and some deductions from business profits.

The Budget documents state: "The existing capital allowances treatment will apply to those who purchase DCPUs before April 2025.

"Transitional benefit in kind arrangements will apply for employers that have purchased, leased, or ordered a DCPU before April 6, 2025. They will be able to use the previous treatment, until the earlier of disposal, lease expiry, or April 5, 2029."

Data from Fleet News suggests that the BiK rate paid by employees would rise by thousands of pounds per year. Drivers of double cab pick-up trucks are already charged a flat rate of £3,960 for BiK every year.

The new charges for the most popular pick-up truck - a Ford Ranger - would set drivers back thousands of pounds since it has a price of around £60,000 and high emissions.

It has CO2 emissions of over 200g/km, meaning it has a 37 per cent BiK tax rate. This would lead to an employee tax of £8,800 a year (or £733 a month) for a 40 per cent taxpayer.

Charges are even higher for a 60 per cent tax employee. Annual costs would set drivers back £13,320 a year, or £1,110 a month.

This follows uncertainty around the car tax status of double cab pick-up trucks. In February, HMRC announced they would begin charging DCPUs as company cars from July 1.

HMRC said the new rule was introduced as a "pragmatic way of resolving the primary suitability and classification of double cab pickups".

It followed a case when Coca-Cola won an appeal to class Vauxhall Vivaro and VW Transport T5 Kombis as cars and not vans.

However, after mass criticism from drivers, some of whom would have seen costs increase fivefold, HMRC was forced to roll back its decision in a massive U-turn.

It announced that it had "listened carefully" to views from the motoring and farming industry and the impact it would have had on their finances.

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The guidance was withdrawn just days after it was introduced, meaning that double cab pick-up trucks would continue to be treated as goods vehicles rather than cars.

Nigel Huddlestone, former Financial Secretary to the Treasury, said the guidance was paused in a bid to prevent drivers from being hammered by expensive costs.

The Conservative MP for Droitwich and Evesham added: "We will change the law at the next available Finance Bill in order to avoid tax outcomes that could inadvertently harm farmers, van drivers and the UK’s economy."