The Future of Pick-Up Trucks and What It Means for Your Fleet

Summary

The 2024 tax change reshaped how double-cab pick-ups are treated, moving all double-cab models out of the ‘commercial vehicle’ tax position and into company-car Benefit-in-Kind bands. That hits both personal and business tax. The challenge is finding replacements that still deliver capability, compliance and cost control. This guide explains what changed, why it matters, and the practical alternatives fleets are considering right now.

Why the change matters

The legislation changes announced by Labour in the Autumn Budget of 2024 were designed to target lifestyle users of the much-loved double-cab pick-up product. Those who run the vehicles in avoidance of hefty CO₂ based Benefit-in-Kind taxation. The halo models such as the Ford Ranger Wildtrak, Amarok Pan Americana and Hilux Invincible X saw users able to benefit from the fixed Benefit-in-Kind of just £4,020 per annum as a 40% taxpayer in line with a standard commercial vehicle, and full asset write-down as plant and machinery usage under capital allowances. The product was ideal for both Corporation Tax efficiency and Benefit-in-Kind tax savings.

Unfortunately, whilst it more or less removed the demand overnight for these halo models, the workhorse double-cab pick-up market, utilised as a key part of fleets for construction, highways, plant, and many other purposes, has been left without a reasonable replacement and has left fleet decision-makers scratching their heads for an alternative.

The challenge for fleet managers

Key tasks such as 3.5t towing, worksite road conditions, and crew transport with awkward loads are now left with a void of options for decision-makers when selecting vehicles. To give some idea of the challenge, the Benefit-in-Kind tax for a driver has gone from £4,020 on the most popular model in the market, the Ranger Wildtrak 2.0 double-cab auto, to £7,688 (37% P11D charge) for a 40% taxpayer, and the 3.0 double-cab auto variant, often the choice for towing plant and machinery, has increased to £8,319 (still a 37% P11D charge, as that’s as high as it goes!) for a 40% taxpayer.

The charge to the employee effectively doubling overnight has left businesses with these key applications unsure of what to do, so what are the options when these faithful machines are up for renewal or replacement? Existing fleet vehicles have until March 2029 at the very latest before they are reassigned under the new tax rules, so the temptation will be for businesses to hold off for a further 3.5 years until they are forced into a decision, but is this the right thing to do with mounting maintenance costs and downtime costs?

While there is no single vehicle that directly replaces the double-cab pick-up, several viable alternatives can meet different operational needs. The following sections explore the main options available to fleets and what each means in day-to-day use.

1.    Crew Vans

The old utility cabs, which appear to have long since left our roads in any volume, will be treated as a car in the same breath as the double-cab, so the options for any meaningful five-seat light commercial variant fall in the hands of a crew van (also known as DCIV, double-cab van, Kombi/ Combi). These come with the same array of exciting specs as the pick-up trucks, but can get very costly when factoring in applications for four-wheel drive usage.

They are additionally available in the rather tight but effective smaller vehicle, with a host of the household name suppliers (examples including Renault Kangoo, Vauxhall Combo, and Ford Transit Couriers) all available in the five-seat, smaller crew van. These aren’t really a direct replacement for the double-cab pick-up though, but will serve the purpose in getting a 5 member crew to a job on a lower end budget.

The Ford Transit Custom DCIV is the leading seller in the more comparable midsize crew van market place and as a four-wheel drive is available in 170PS Auto gearbox reserved for the higher trim level specs. This would appear to be a welcome alternative, but when towing capability is factored in, the vehicle falls short with a maximum of 2.5t for braked trailers if the application demands more. This is the same for all models in the range with a few on the RWD and FWD models capable of up to 2.8t capability. There are also more affordable front-wheel drive products with Renault Trafic, Vauxhall Vivaro, and Volkswagen Transporter variants, to name a few.

With a lot of models being built on the same platforms, it’s usual to see the spec of Vauxhall, Toyota, Citroen, Fiat, and Peugeot all in similar variants, options, and specs and the same with Nissan, Renault, Ford and Volkswagen. Being aware of this helps to focus less on the badge, to narrow down the needs of the application, and to choose the right product for the proposition.

All of these are treated as commercial vehicles, so are fully covered under Annual Investment Allowances for Corporation Tax purposes, and driven at the aforementioned £4,090 Benefit-in-Kind 40% tax mark as a commercial vehicle. Please note though, as with the case of Coca-Cola (Coca-Cola seeks permission to appeal ‘van or car’ tax case | Fleet News) in 2020/21, there is increasing scrutiny over this product, particularly when combined with a lifestyle viewed usage, so if the approach of the legislation continues with a look to tax any potential lifestyle usage vehicle, this may be the next area of focus.

Pros

• Treated as a commercial so ideal for Corporation Tax benefits and employees Benefit-in-Kind costs.

• Capability with options of four-wheel drive product and carrying of five to six people for a job.

• Higher spec options available allowing the lifestyle user to still benefit from the cross of work/life balance.

Cons

• Less appealing and capable than a 4x4 option and more restrictive on weights.

• Four-wheel drive product is a premium and only available on higher trim models, limiting selection and constraints on budget.

• 3.5t towing capability is not an option and therefore, cannot cover key tasks for that application.

2.    Car-Derived Vans and Single-Cab Pick-Ups

The car-derived van has been making a comeback in recent years with the well received Toyota Corolla Commercial as the flagship in the budget sector of the market ideally placed for fuel efficiency along with specific applications of smaller load transport. These still tick that criteria for the all important fixed commercial vehicle Benefit-in-Kind eligibility. It has been joined by other growing in popularity entrants, largely from the Toyota, KGM, and Land Rover brands.

The Land Rover Defender Hardtop 90, and the more questionable 110 in terms of feasibility as a commercial, are the ultimate two and three-seat replacement for the pick-up truck. Hard-working, capable of that 3.5t towing capacity and highly specified and desirable, these are the perfect replacement for the lifestyle users and the premium end of the pick-up replacement options. We will not be surprised if growth in this area proceeds rapidly, particularly as many have to give in to the tight grip of their current double-cab pick-ups with that all impending maintenance and downtime issue of older vehicles.

The introduction from converters of ‘temporary seating’ as a three-seater bench in the rear raises eyebrows about its authenticity as a commercial vehicle, but it is growing in popularity and looks the part for hybrid work and family use. What makes this product so appealing is the strong residual value making it a great candidate for RV-backed products such as leases. We do question though how it might be considered from an aesthetic perspective of site managers and plant deliveries being conducted by a Land Rover Defender 90 instead of a double-cab workhorse. It might not send the right message to customers and employees particularly in increasingly challenging economic times.

New model alternatives in this area range from the highly affordable KGM Rexton to the Toyota Landcruiser Commercial, Land Rover Discovery, and INEOS Grenadier look very promising and might just cover some of the ‘presentation’ gap.

There is also still the ‘original’ pick-up option as a single-cab, which is still treated as a commercial. The limitation of two-seats has always been a challenge and the lack of options to alter this (for the more creative temporary seating option). The single-cab is still a highly viable option with the same range of manufacturers as the double-cab market, offering four-wheel drive, 3.5t towing and a decent solution for awkward loads, but it isn’t as trendy, and really has a domain in the workhorse sector of this market rather than any lifestyle considerations.

Pros

• Treated as commercial, ideal for Corporation Tax benefits and employees’ Benefit-in-Kind costs.

• Capability with options of four-wheel drive product.

• Higher spec options available allowing lifestyle users to benefit from the work/life balance. 3.5t towing capability on many models and nearly all single-cab pick-ups.

Cons

• The ability to carry more than three people depends on a questionable after fit solution in the ‘temporary’ bench seating option.

• Single-cab pick-ups are all two-seat variants without the option of a jump seat (third seat).

• Budget options are restricted and can make this less than ideal as a selection for the majority of drivers in the car-derived van market steering a lot of applications to the single-cab.

3.    Electric Pick-Ups

Electric vehicles have been making waves in the passenger car realm, with lifestyles changing to accommodate charging requirements and range anxiety scares. Sadly, adoption in the commercial vehicle world has been left to large fleets with the infrastructure to support, while SMEs have often held off adopting it. This has been different in urban and short distance areas where the change has been accepted (some may say welcomed), but realism about the application and real-world situation becomes essential when we talk about commercial vehicles.

There is currently only one real contender in the commercial market offering an electric pick-up alternative, which is Maxus. The eTerron 9 has replaced the range-limited T90 as a genuine option, delivering 3.5t towing capacity, four-wheel drive, and a combined WLTP range of 267 miles. While the payload on the luxury trim is limited at 620kg (roughly five adult males and a handful of tools), the Premium variant is more practical, offering an impressive 1,050kg payload.

Electric vehicles as a general alternative to pick-ups are also an option with SUV products such as the Dacia Commercial Electric (its cheap, but with two-seats isn’t a patch on the Corolla Commercial), and the more lifestyle focused electric options offered by the usual European car manufacturers along with Chinese entrants such as Jaecoo, and Chery.

The downside? Aside from changing the attitudes to fuel stops (charging stops), range anxiety, and supporting workers with home charging, the residual values are the elephant in the room. In markets such as plant and construction where outright purchase and ownership products have been a key purchasing method, this is not the option for this product. Residual values remain highly volatile and incredibly susceptible to government changes and consumer confidence. In short, if you decide to go with the electric option, ensure there is either an option to hand it back, or it’s on a non-ownership product.

The electric vehicle will be taxed as a car, but with potential government grants available on commercial options of £5,000, these are more affordable than the commercial vehicle option for the driver on Benefit-in-Kind.

Pros

• Tax efficient for the driver with a low Benefit-in-Kind value.

• Reasonable WLTP consumption, categorising this as a viable option for many applications.

• Capability with options of four-wheel drive product and carrying of five people for a job.

• Higher spec options available allowing lifestyle users to benefit from the work/life balance.

• 3.5t towing capability available on the eTerron product.

Cons

• Electric restriction requires onsite or at-home charging for the driver creating additional challenges for SMEs.

• Residual value concerns result in a change of buying behaviour for a lot of businesses.

• Electric options are highly limited, and whilst this will improve over the coming years, it is highly restrictive in terms of options.

• Payload figures are very poor on the budget model.

4. Plug-in Hybrid Pick-Ups

These have been an exciting alternative to the standard pick-up and Ford have really stolen a march on the competition here. The Ranger PHEV is priced in a real-world environment at about £5,000 more than its diesel ancestor after discounts are considered, and its real-world usage as an electric vehicle raises eyebrows with a range of 26 miles, but the CO₂ sitting at 141g/km still means this is taxed at the Benefit-in-Kind rate of 34%, meaning a 40% taxpayer will still need to pay £7,481 based on the Wildtrak range. The change in treatment of hybrids requiring a range of over 50 miles to qualify for the lower CO₂ calculation did not help this new entrant sadly.

For a price hike vs. the diesel, and only a £900 saving per annum for the employee, this technology may need an onward step before becoming a viable alternative for most businesses. This may be the best option for companies who cannot make electric work, and need to tow 3.5t with all the functionality of a pick-up truck, but the steer would potentially be to look at a more cost-effective plug-in hybrid SUV capable of the same towing. Unfortunately, there is very limited availability in this sector, with 3.5t towing being reserved for the meatier diesel engines with higher CO₂. 

Pros

• Slightly more tax-efficient for the driver than the double-cab diesel option with a low Benefit-in-Kind value.

• The same capability of the existing workhorse with options of four-wheel-drive product and carrying of five people for a job.

• Higher spec options available allowing lifestyle users to benefit from the work/life balance.

• 3.5t towing capability as standard.

• Qualifies for the electric vehicle grant.

Cons

• Electric usage option requires onsite or at-home charging for the driver creating additional challenges for SMEs.

• Vehicle is estimated at real-world cost increase from diesel pick-up at circa £5,000.

• Limited option in terms of vehicle availability and selection.

• Benefit-in-Kind for the driver is still tremendously expensive, and it’s unlikely employees will engage with this as a reasonable alternative to the current commercial vehicle tax benefits voluntarily.

Conclusion: plan the transition, protect capability

The conclusion may sound a little bleak, but there isn’t really a one-size-fits-all solution. It instead comes down to what works best for the application. For lifestyle users looking for the most appealing and tax-efficient option, the choice depends on the need for passenger carriage. It may be between a car-derived van such as the Defender 90 or a crew van such as the Transporter Kombi or Transit Custom. If towing is essential, the electric option can be a viable choice alongside the car-derived van or single-cab pick-up, though both come with certain limitations and restrictions.

Ultimately, the right option depends on what best suits your business, but you are not alone in the decision. Approximately 40,000 pick-up trucks are sold in the UK each year, and while some are purchased for lifestyle use or tax benefits, the majority serve a genuine business purpose.

Automotivate Leasing is here to guide you towards the best option for your business. Whether it’s funding, vehicle selection, or navigating the legislative challenges that impact your fleet, we’re here to help.

This guide was written by Dominic Ilbury (Managing Director at Automotivate). The content of this blog is to provide general insight and information purpose only and is not a substitute for professional advice. The views expressed are his own and do not reflect the official views or policies of the company. Any reliance you place on the information is therefore strictly at your own risk. All external links are included for information purposes only.

BIK information provided was sourced from ComCar.