Company Car Today

Every month seems to bring headlines about falling registrations in the new car market, but there are a few sectors that are shunning this trend.

Pick-up trucks is one of these, because sales have been steadily on the rise for some time, having gone up by 7.8% from 2016 to 2017 and a further 4.3% year-on-year in 2018.

This trend had continued through 2019, although a tough September for the industry saw sales slip behind 2018.

Cap HPI has suggested that this rise is down in part to the beneficial tax classification that pick-ups enjoy. If pick-ups have a payload greater than 1040kg (the extra 40kg is to allow for an aftermarket hard top) then they can be classified as a van and therefore qualify for the commercial vehicle Benefit-in-Kind tax rate. As this is based on a fixed rate – £3430 for the 2019/20 tax year – then the resultant personal tax bills are much lower than they would be on a similarly priced SUV, as the table below shows.

Analysis: Truck vs Car - The Tax BenefitsThere isn’t any clear data on how many of these vehicles have been taken on as pure company cars, and the popularity of the double-cab lifestyle vehicle among owner-operators and small business owners means that the lines are somewhat blurred. Cap’s senior editor, commercial vehicles and motor cycles, Steve Botfield, says that lifestyle models (double cab, body-coloured bumpers etc) accounted for 13.8% of pick-up registrations in 2018, a big rise from the 7.5% of 2010.

“The main factor is the tax benefit” he says.

“Most manufacturers have now dabbled in that area because they can see that there is a benefit to sales volumes.” However, he urges caution, saying that there are problems ahead come remarketing time.

“The first buyer gets the tax benefit but the second probably won’t,” says Botfield. “There are far fewer people buying that lifestyle vehicle for what it is designed for – people would rather drag their caravan around with a Honda CR-V than a two-year-old Ford Ranger Wildtrak. These are a range of vehicles that is difficult to find homes for.”

This, he suggests, has led to Cap revising the values for several models due to “50 or 60” models recently selling below average price.

However, the tax calculation is not quite as simple as it might first appear, points out Ashley Barnett at Lex Autolease. He believes that potential pick-up drivers need to be aware of a few possible stumbling blocks.

Chief among these is the way in which a company car is offered to a driver, as he points out that “if you are a perk user then you are going to get taxed on the cash alternative”.

He also cites a recent case in which some dual-purpose vehicles – crew vans in this case – were taxed as cars rather than commercial vehicles. “If it is a tool to do a job you need to remove any cash option. What we don’t want is a case where a number of people put these on a policy and because they are luxurious they are not seen as a van.”

He also questions the number of drivers that are choosing pick-ups on the basis of BiK. “Based on the numbers I have seen it seems as though we are seeing marginal movement in that area – it wouldn’t suggest people are moving there because of the BiK benefit. Would we see a change if we moved to a CO2 [BiK] system? I don’t think so.”

Toby Marshall, Mitsubishi Sales & Marketing DirectorBarnett suggests that the real driver behind the rise in demand for pick-ups is pure business need, something that Toby Marshall, Mitsubishi’s marketing and sales director (pictured right) agrees with, suggesting that the move towards more comfortable trucks means that they can do two roles at once.

“We are not really seeing people coming out of a BMW 5-Series and going into a pick-up truck, but what we have seen are small business that might have a Ford Transit and an Audi Q5 and they can sell both of those and get a pick-up truck,” he says.

The lines are blurred between fleet and retail sales in the pick-up market, says Marshall. “Even the retail buyers are small businesses, some might be paying VAT but it will be a one-off personal sale. It is very much a tool for a job.”

He concedes that a change to company car taxation would have quite an impact, though, saying that there might well be a proportion of potential pick-up buyers that would revert to running both a van and a car.

Lex Autolease’s Barnett has reason to be hopeful on any potential changes, though, saying that he has been impressed by how the government has listened to the consultations on topics such as WLTP and he feels the same would be true for this topic.

“The difficulty with the CV world is that any tax implication impacts people who are using them for business reasons,” he says. “Phillip Hammond alluded that the freeze on fuel duty was a boost for white van man and that would include double-cab drivers. They don’t want to include anything rashly that would impact that sector.”

Tom Webster