Tax Treatment of 4x4 Pickup Trucks Creates Market Boost

Strategic Insights -

The market for 4x4 pickup trucks, such as Mitsubishi's best-selling L200 and Nissan's Navara, is growing rapidly in Britain, largely due to favorable tax treatment. These vehicles are classed as commercial, allowing VAT-registered buyers to claim back the 17.5 per cent VAT. Additionally, pickups pay a single flat rate of £500 for benefit-in-kind company-car tax, although this will increase to £3,000 a year in March 2007. This tax treatment has created a surge in demand, with Mitsubishi alone expecting to sell 17,000 Thai-built L200s in Britain this year.

Key Takeaways:

  • Mitsubishi's L200 pickup is the best-selling vehicle in their lineup, with 4,100 customers claiming VAT back on their purchases this tax year.
  • The 4x4 pickup truck market is growing rapidly in Britain, with favorable tax treatment a major contributor to this growth.
  • Pickups are classed as commercial vehicles, allowing VAT-registered buyers to claim back the 17.5 per cent VAT.
  • Benefit-in-kind company-car tax for pickups is a single flat rate of £500, although this will increase to £3,000 a year in March 2007.
  • The tax treatment has created a surge in demand, with Mitsubishi expecting to sell 17,000 Thai-built L200s in Britain this year.
  • The main players in the 4x4 pickup truck market are Mitsubishi and Nissan, with Mitsubishi leading the market.
  • The tax treatment also includes a tax-free fuel benefit, with a flat rate of £500 for free fuel, much less than the escalator charge for company cars.

Statistics:

  • 4,100 customers have bought Mitsubishi L200s this tax year and claimed back VAT.
  • Mitsubishi expects to sell 17,000 Thai-built L200s in Britain this year, their third-best-selling vehicle.
  • The 4x4 pickup truck market is growing rapidly, with Mitsubishi having 1,000 unfulfilled orders.
  • The benefit-in-kind company-car tax for pickups will increase from £500 to £3,000 a year in March 2007.
  • The tax-free fuel benefit for pickups is £500, a flat rate which is much less than the escalator charge for company cars.

Sources:

  • "Our L200 pickups are mainly bought by farmers and builders' - Jim Tyrrell, Managing Director of Mitsubishi Motors (UK).
  • The Financial Times - "Mitsubishi expects strong sales of L200 pickup in Britain".