DCPUs: What You Need to Know for 2025/26

From April 2025, changes to the tax treatment of vans and double cab pick-ups (DCPUs) will come into effect. The van benefit charge and fuel benefit charge will increase, while new rules will see certain DCPUs reclassified for tax purposes. HMRC has issued guidance on these changes, below is a summary of the key updates and their impact.

For 2025/26 van benefit increased to £4,020 per van and the van fuel benefit charge where fuel is provided for private use increased to £769.

If a van cannot, in any circumstances, emit CO2 by being driven, the cash equivalent is nil.

In addition, HMRC has announced a change of policy in the treatment of DCPUs. Following a Court of Appeal judgment, the government will treat DCPUs with a payload of one tonne (1,000kg) or more as cars for certain tax purposes.

From 1 April 2025 for Corporation Tax, and 6 April 2025 for Income Tax, DCPUs will be treated as cars for the purposes of capital allowances, benefits in kind and some deductions from business profits.

HMRC has issues guidance and the position is summarised below.

Capital allowances

For expenditure incurred on or after the above dates, DCPUs will be classified as cars, meaning that the Annual Investment Allowance and other preferential capital allowance reliefs available to ‘vans’ will not be available.

Transitional arrangements will apply when an amount of expenditure is incurred as a result of a contract entered into before the above dates and the expenditure is incurred on or after that date but before 1 October 2025. In these circumstances a DCPU with a payload of one tonne or more will continue to not be treated as a car.

Benefits-in-kind

Again, most DCPUs are expected to be classified as cars when calculating the benefit charge for 2025/26 onwards. Transitional arrangements will apply for employers that have purchased, leased or ordered a DCPU before 6 April 2025, whereby they will be able to treat such a vehicle as a ‘van’ until the earlier of disposal, lease expiry or 5 April 2029.

Leasing

Expenditure incurred on the hire of a DCPU, on or after the above dates, will treat such a vehicle as a car, meaning that restrictions of lease payments based on emissions may apply.

Transitional arrangements will apply to expenditure incurred on the hire of a DCPU if the contract for hire is entered into before the above dates and the expenditure is incurred on or after these dates but before 1 October 2025. In these circumstances, the expenditure will continue to be treated as expenditure not incurred on the hire of a car.

VAT

The treatment for VAT purposes has not changed; DCPUs with a payload of one tonne or more are treated as vans. DCPUs with a payload under one tonne are considered to be cars. If a vehicle is classified as a car, VAT cannot generally be recovered on its purchase.