Author Archive: Muhammad Zia

How are digital assets handled in the probate process?

As technology advances, digital assets are becoming more and more common, which can complicate the probate process.

Probate, a process that deals with the distribution of a deceased person’s estate, has traditionally dealt with physical assets such as properties, money, and personal belongings.

However, in this increasingly digital world, what happens to one’s online assets upon death must also be considered.

What are digital assets?

This term encompasses a broad range of digital belongings. These include assets such as:

  • Emails
  • Digital photos or videos
  • Social media accounts
  • Cryptoassets
  • Digital intellectual property
  • Domain names
  • Online banking accounts

How do these impact probate?

It could be easy to overlook digital assets, especially if the Executor does not have the relevant logins for accounts.

However, if they are of value, digital assets should be included in the valuation of the estate, as they impact whether Inheritance Tax (IHT) is due.

In the case that the digital assets do not hold value, they will not need to be taken into account when conducting the valuation.

We can help you to identify the estate’s assets and liabilities to determine this value, along with preparing the relevant tax returns.

IHT may be due if the estate exceeds the nil rate band of £325,000. Should the residence nil rate band apply, the tax-free threshold will be increased to £500,000.

The challenge with cryptoassets

As cryptoassets are considered part of the estate for IHT purposes, their value must be determined and taken into account.

It is advised for individuals to outline how to access their cryptowallet in their Will, which makes it easier for the Executor to identify and value assets.

In the instance that the individual’s Will didn’t outline how to access their cryptowallet, this can pose problems.

Experts may be able to help to review the deceased’s computer to gain account details, however this may not be possible. Find out more about handling cryptoassets here.

It is essential for Executors to attempt to identify and value all assets held by the deceased and seek advice from experts to guide them through this.

Need support with the probate process? Contact our team today.

Car vs Van – Tax treatment of electric vehicles

There have been several important tax decisions previously regarding the difference between vans and cars, but how do the different rules regarding electric vans affect their tax treatment?

Let’s use a hypothetical:

A Ltd has acquired a new electric company van that its director, Bob, uses to go to and from work, as well as during the regular workday.

However, Bob also has the van in the evening and at the weekend for his private use. For Benefit in Kind (BiK) purposes, the company classes the vehicle as an electric van.

Unlike company cars, the BiK charge for an electric van is nil. Therefore, employees with electric company vans can, where permitted to do so by their employer, use their company van for unrestricted private use without any associated tax charge.

Unfortunately, HMRC disagrees with this judgement and argues that the van, is in fact, an electric car and not a “goods vehicle”, as defined by Section 115 ITEPA (Income Tax (Earnings and Pension) Act) 2003.

This states:
(1) In this Chapter— “car” means a mechanically propelled road vehicle which is not:
(a) a goods vehicle,
(b) a motorcycle,
(c) an invalid carriage, or
(d) a vehicle of a type not commonly used as a private vehicle and unsuitable to be so used;
“van” means a mechanically propelled road vehicle which:
(a) is a goods vehicle, and
(b) has a design weight not exceeding 3,500 kilograms, and which is not a motorcycle.
(2) For the purposes of subsection (1)…
“goods vehicle” means a vehicle of a construction primarily suited for the conveyance of goods or burden of any description;

In reaching such a decision, HMRC would need to prove that the van in question had multiple purposes, beyond just the transport of goods.

Many modern vans have been designed and are advertised as multipurpose vehicles, and there are a number on the market that have crew cabs or “kombi” roles, that allow for passengers as well as goods.

This confusing situation has been tested many times, not least in the case of Payne, C Garbett, Coca-Cola European Partners GB Ltd v HMRC at the Court of Appeal on 20 July 2020.

In this case, HMRC was able to prove that the VW Transporter T5 Kombi and Vauxhall Vivaro vehicles provided by Coca-Cola to employees were not vans, and instead served the purpose of being a car.

Examples and cases such as this can make it difficult for companies to find the most tax-efficient fleet of vehicles and can make the choice of vans and cars more complicated.

If you are looking to purchase new vehicles for your business, it is important to seek expert advice. Contact us to find out more.