LogoLogo
Recap HomeCrypto Tax Guide (Lite)HMRC Cryptoassets Manual
  • A Technical Guide to Cryptocurrency Tax for UK Individuals
    • What are Cryptoassets?
    • Who are Recap?
  • CRYPTOCURRENCY TAX
    • Do I Need to Pay Tax on my Cryptoassets?
    • Which Taxes Apply?
      • Capital Gains Tax (CGT)
      • Income tax
      • VAT
      • Inheritance tax
      • Stamp Duty
    • How Much Tax Will I Pay?
    • New HMRC DeFi Guidance
      • Overview of HMRC guidance
      • 1️⃣Is the Reward Income or Capital?
      • 2️⃣Is Beneficial Ownership (BO) transferred?
      • 3️⃣Consider the Tax Treatment
        • Staker/Lender/Collateral Provider
          • Income Rewards
            • BO transferred
              • ➡️At Point of Entry
              • ⬅️At Point of Exit
              • 💧On Liquidation
              • 💎On Receipt of Income Reward
              • Example 1A
              • Example 2A
            • BO not transferred
              • ➡️At Point of Entry
              • ⬅️At Point of Exit
              • 💧On Liquidation
              • 💎On Receipt of Income Reward
              • Example 1B
              • Example 2B
          • Capital Rewards
            • BO transferred
              • ➡️At Point of Entry
              • ⬅️At Point of Exit
              • 💧On Liquidation
              • 💎On Receipt of Capital Reward
              • Example 1C
              • Example 2C
            • BO not transferred
              • ➡️At Point of Entry
              • ⬅️At Point of Exit
              • 💧On Liquidation
              • 💎On Receipt of Capital Reward
              • Example 1D
              • Example 2D
        • Borrower
    • Investor or Trader?
      • Badges of Trade Limitations
      • HMRC Approach
      • Court Cases involving Financial Traders
    • Capital Gains Tax
      • Calculating the Capital Gains Position
      • Disposal proceeds
      • Disposals to Connected Parties
      • Allowable costs for CGT
        • Exchange fees
        • Forks - affect on allowable costs
      • Capital Loss Claims
    • Income Tax
      • Financial trading income
      • Miscellaneous Income
      • Employment income
    • Fair Market Valuation
  • TRANSACTION TYPES
    • 💷Selling Crypto for Fiat
    • 🔄Trading Crypto to Crypto
    • 🛍️Purchases using Crypto
    • 🎁Gifts
    • 💍Spouse Transfers
    • 🎗️Gifts to Charity, CASCs & Bodies for a National Purpose
    • 🎈Airdrops
    • 🤝Staking
    • 💸Transfers
    • 🍴Forks
    • ⛏️Mining
    • 👛Employment income
      • UK Employer
      • Overseas employer
      • National Minimum Wage (NMW)
    • 🚨Lost & Stolen Crypto
    • 🎲Gambling
    • 💧Liquidity Pools
      • Example - Liquidity pool
    • ⬆️Token Upgrades/Swaps
    • 🔮Cryptoasset derivatives (CFDs, Futures and Margin Trading)
    • 💼Crypto Loans
    • 🔄REPOS
    • 🪞Reflections Rewards
    • 👥Referral Income
    • 💳Cashback
    • 🎨NFTs (Non Fungible Tokens)
    • 🎮NFTs earned playing games
  • Record Keeping
  • Filing Your Self-Assessment
    • How to Register for Self-Assessment
    • How to Fill In the Tax Return
    • Submitting the Tax Return and Paying the Tax
Powered by GitBook
On this page
  • Inheritance tax upon death
  • Inheritance tax upon lifetime transfers

Was this helpful?

  1. CRYPTOCURRENCY TAX
  2. Which Taxes Apply?

Inheritance tax

PreviousVATNextStamp Duty

Last updated 3 years ago

Was this helpful?

Inheritance tax upon death

Cryptoassets are treated as property for Inheritance Tax (IHT) purposes. This means that the sterling value at the date of death will form part of an individual’s Estate and IHT may be payable, depending on the overall size of the Estate.

HMRC sets out its position on IHT and cryptoassets in their guidance at .

A digital Will is recommended to provide instructions to your executors on how to access the cryptoassets. Without this, it may be an impossible task, in which case the executors will need to demonstrate to HMRC that the cryptoassets are irrecoverable and therefore worthless. It is unclear whether HMRC would accept such an argument, since the cryptoassets still exist on the blockchain and could objectively still retain a value; it is just that they cannot be accessed. It is most likely that the executors will need to prove to HMRC's satisfaction that the private key cannot be retrieved.

There is a significant risk of price volatility for executors. The value at the date of death is subject to Inheritance Tax, yet the value may drop significantly afterwards. There are currently no inheritance tax reliefs to take account of cryptoassets dropping in value after the date of death (unlike investments in shares and land).

The location (also referred to as situs) of assets may need to be determined for non-UK domiciled taxpayers. Guidance on HMRC’s position is at .

Inheritance tax upon lifetime transfers

Transfers of cryptoassets during an individual's lifetime are also subject to the inheritance tax regime. They may be subject to inheritance tax at the time of the transfer, depending on the value of the transfer, the recipient and prior transfers of value.

Gifts during an individual’s lifetime to another individual are Potentially Exempt Transfers (PETs) for IHT purposes. However a gift is a taxable disposal for Capital Gains Tax (CGT) purposes, so all relevant taxes need to be considered. IHT may be payable if the donor dies within 7 years of making the PET.

Gifts into a Trust are Chargeable Lifetime Transfers which may be subject to IHT at the date of transfer; in addition to being a taxable disposal for CGT purposes. Often the CGT can be deferred when there is a Chargeable Lifetime Transfer through.

If you are contemplating gifts or transfers at an undervalue of cryptoassets, it is recommended you seek bespoke advice from a qualified tax professional.

CRYPTO25000
CRYPTO22600