Shoreham Vehicle Auctions (SVA) has called for key industry stakeholders to work closely with the HMRC to shape new legislation surrounding the Benefit in Kind (BIK) tax treatment on one-tonne Double Cab Pick Ups (DCPU).

Now that BIK treatment of DCPUs is on the HMRC’s agenda, SVA’s MD Alex Wright believes the conversations should be ongoing to ensure they shape new legislation that does not penalize the business use of these vehicles.

“The industry must consult with HMRC to get the right decision over the line,” said SVA’s MD Alex Wright.

“HMRC is looking to settle a taxation issue that has been bubbling for more than two decades. It wants to get rid of the grey areas that are in place that encourage tax avoidance which we can understand,” said Wright.

Subsequently, SVA has talked to dealers, fleets and SMEs, including farmers following HMRC’s announcement and subsequent U-turn in February to tax DCPUs from 1 July as company cars.

It has addressed the issue, which includes introducing a luxury tax on pickups that cost over £35,000 plus VAT to denote them as being recreational, as opposed to business-use vehicles.

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That way the high-value, high-spec pickups purchased by SMEs and consumers alike with large petrol engines, which would normally command a high level of taxation if fitted in a car, would be affected by the new luxury tax. Meanwhile, companies who buy and run DCPUs costing much less than £35,000 for genuine business use would not be penalised.

The £35,000 luxury tax would also keep rental and leasing companies happy as it would protect the residual values of business vehicles and help them predict future values more accurately.

“We want to protect sales and residual values, as well as avoiding penalising staff who drive DCPUs for business use,” said Wright.

“Leasing and finance companies shouldn’t have to pay for the cost of HMRC policy changes. If a future date is confirmed to roll out new legislation, risk managers can plan accordingly to make the right decisions for their companies and not have to make provisions for residual value losses when disposing of existing stock.

“Companies are investing in DCPUs to safely carry people, equipment and tools. We don’t want a situation where HMRC taxation might compromise work efficiency and safety,” he added.

Wright welcomes any feedback to his luxury tax proposal and is happy to be part of any industry group that works alongside HMRC to bring the DCPU legislation to a suitable conclusion.