HMRC could relax VAT rules for electric pick-ups

May 6, 2026

HMRC is now considering a rule change that could make some pick-ups significantly more attractive to fleets and business users. FleetWise has already reported a growing number of electric pick-ups entering the market.

At the centre of the discussion is the current VAT rule for double-cab pick-ups. To qualify as a commercial vehicle for VAT purposes, a pick-up must currently be able to carry a payload of at least one tonne. That has become a problem for some electric models because heavy battery packs reduce the amount of payload available.

The Society of Motor Manufacturers and Traders (SMMT) has reportedly asked HMRC to lower the payload threshold for electric pick-ups, arguing that the current rules were designed around diesel vehicles rather than EVs.

If accepted, the change could allow businesses to reclaim VAT on models that currently fall outside the rules, including the KGM Musso EV and Maxus eTerron 9.

For fleets, the financial impact could be significant. On a Musso EV, for example, reclaimable VAT could be worth close to £8,000.

The timing is important because electric pick-ups are slowly starting to carve out a place between traditional vans and SUVs, particularly for drivers who need towing ability, practicality, or off-road capability without moving into diesel.

It also follows wider changes to pick-up taxation introduced earlier this year, where double-cab pick-ups began being treated as cars for Benefit-in-Kind purposes. Electric versions still benefit from low 4% BIK rates, which has helped keep them relatively appealing as company vehicles despite the broader tax changes.

While no decision has been confirmed yet, the fact HMRC is reviewing the issue at all suggests regulators are beginning to recognise that EVs do not always fit neatly into rules originally written for petrol and diesel vehicles.