HMRC is evaluating a significant car tax adjustment that could impact electric double-cab pick-up trucks. The proposed change involves modifying VAT rules to classify these vehicles as commercial assets, potentially allowing businesses to reclaim VAT on purchases.
Current VAT Classification Rules
Under existing regulations, double-cab pick-up trucks are considered commercial vehicles for VAT purposes only if they have a payload capacity of at least one tonne. However, due to the weight of electric vehicle batteries, manufacturers struggle to meet this threshold with electric trucks compared to their diesel counterparts.
SMMT Proposal
The Society of Motor Manufacturers and Traders (SMMT) has raised concerns and submitted a proposal to HMRC. The proposal suggests implementing a reduced payload threshold specifically for electric double-cab pick-ups. This would allow them to be treated as commercial vehicles and enable VAT recovery on the purchase price.
An HMRC spokesperson told Fleet News: “SMMT has submitted a proposal suggesting a reduced payload threshold for electric DCPUs, which would allow them to be treated as commercial vehicles and enable VAT recovery on the purchase price. We are considering this proposal.” The spokesperson added that no decision has been made yet, and no specific rule change has been agreed.
Background on Tax Classification
From April 6, 2025, HMRC ceased aligning its interpretation of “car” and “van” for tax purposes with VAT definitions. Under the VAT approach, double-cab pick-ups are classified based on payload: anything under one tonne is a car, and one tonne or more is a van. This rule was previously used pragmatically to resolve classification issues. Going forward, classification must be determined by assessing the vehicle as a whole to establish its primary suitability.
The potential change aims to support the adoption of electric vehicles in commercial fleets, aligning with broader environmental goals. However, HMRC has not yet confirmed any timeline for implementing the revised rules.
