I was recently approached by a company and asked if I would match a competitor’s quote for a Mitsubishi pick up truck.
Not because we couldn’t couldn’t do the deal commercially but because it wasn’t a good deal for the customer and here’s why.
Pick ups are taxed advantageously when run as company cars as they are classed as commercial vehicles and, even if used privately by the user, a higher rate taxpayer pays around £105 per month only in benefit in kind tax which is much lower than for an equivalently priced car. However, to retain their qualification as a commercial vehicle, there is something to watch out for. To qualify for this low rate of company car tax, the truck, as sold, needs to be able to carry at least a tonne over and above the weight of the vehicle itself. Any accessories added (fixed) to the truck reduce its weight carrying ability and if that takes it below 1000Kg then there are tax implications.
A common addition for a pick up is a hardtop canopy on the back and, as these are common, the manufacturers generally build in enough weight capacity to cover them. Rather than weigh every canopy on the market, HMRC assigns a generic weight of 45Kg to all of them. In this instance the pick up has an official payload of 1045Kg and therefore adding the canopy in isolation would not be an issue. But in this case, my customer needed the canopy, a tow bar and a loadliner taking the remaining load capacity below the tonne mark and, for tax purposes, turning it into a car.
And, as a car, taxed on a combination of of P11D value (around £33,000) and the 35% tax band due to emissions (pick ups are heavy and inefficient compared to cars), the benefit in kind cost to the higher rate tax paying driver would have jumped from £105 per month to not much under £400 per month – a big jump and more than the cost of leasing the vehicle itself.
The solution? We ordered the vehicle without the hardtop and the customer arranged to buy one separately elsewhere and have it fitted after delivery. That way it’s not classed as part of the vehicle for BIK tax reasons and the truck retains enough weight carrying potential to remain being classed as a commercial vehicle.
So, if you are considering buying or leasing a pick up truck through your business, watch those accessories and their weight and make sure it remains a tax efficient vehicle. Use a leasing specialist who will take the time to make sure your chosen configuration works for you.
As an aside, I wouldn’t generally recommend a pick up as an alternative to a car just for tax reasons. They are big, not very economical and not as good to drive as a car. The driver in this case needs to pull a horse box and consequently it’s a great choice for them.
If you’d like to know more about how leasing works and how it could work for you, please get in touch. If you think others would be interested in this post, please share it.