Do I Have to Pay Inheritance Tax on My Bitcoin and can My Cryptoassets be inherited?

Bitcoin tax

Some posts on The Crypto Adviser contain affiliate links. We link to these companies because of their quality. Whether or not you decide to use these links is completely up to you.

The number of people holding Bitcoin and other digital currency has exploded in recent years bringing another level of complexity to succession planning.

Even though cryptoassets are intangible they’re classed as property so if you hold Bitcoin or any other coin or token and you’re a resident of the UK they will form part of your estate during an Inheritance Tax (IHT) calculation when you die, whether by way of gift, trade or swap.

It’s vitally important that you keep a careful note of your holdings and the login details to the accounts/wallets where they’re stored.

This information, and any private keys or pass phrases associated with your cryptoassets needs to be passed on to your personal representatives or executor(s), otherwise your crypto could be lost forever (as have an estimated 3.8 million Bitcoins out of a total supply of 21 million already).

Related post: How to avoid Inheritance Tax on your cryptocurrency and other estate assets

Can my Bitcoins be inherited?

Yes, your Bitcoin and other cryptoassets can be passed on to your family, friends or any other beneficiaries of your Will.

As I’ve mentioned, they’ll need access to your wallets and private keys, and the value of the crypto at the time of your death will have to be included in any IHT calculation that may take place.

Succession planning is not something any of us want to think about, but it can make life much easier for your loved ones if you plan ahead.

As part of this, you should ensure that someone you trust is tech-savvy when it comes to cryptocurrency and has the knowledge and understanding to access your coins.

Can they create fresh wallet addresses for the transfer of crypto, or will they be able to liquidate your holdings if that is your wish?

It’s worth having this conversation in good time to ensure that everything goes smoothly when it comes to passing on your assets.

Don’t include passwords or private keys in your Will

Although you should mention your cryptoassets in your Will in broad terms, do not include any private information here.

As soon as a Grant of Probate has been obtained your Will becomes a public document and is accessible by anyone.

Instead, write a private letter of wishes including details of your cryptoassets and how to access them, including:

  • Usernames
  • Passwords
  • Public and private keys
  • Passphrases

Be sure to keep this in a very safe place, and only tell people you trust where it is.

Give step-by-step instructions on how to access your crypto

It’s a good idea to include detailed step-by-step instructions on how to access your coins depending on where they’re held, as some people split their holdings for security. This includes:

  • On an exchange, such as Coinbase or Binance. This is known as a hot wallet. The keys are held by the exchange.
  • A cold wallet, such as a hardware or paper wallet. You retain the keys.
  • A mobile wallet, such as Trust Wallet. The keys are stored on your device.
  • A USB stick kept unplugged from your computer. This is risky because at some point it will need to be connected to a computer to access.

Bear in mind that accessing someone’s exchange account could breach the terms of service of the platform and potentially breach various laws, include fraud, depending on the jurisdiction which governs the account.

If you have a Grant of Probate this should enable to access the deceased person’s assets. If probate isn’t required, a death certificate may suffice.


  • Decide whether you want to dispose of your crypto or pass it on.
  • Do not include any private information about your Bitcoin in your Will.
  • Write a letter of wishes detailing your cryptoassets and how to access them.
  • Keep this in a safe place, but tell your representatives/executor(s).
  • Ensure there’s a trusted person who has the technical knowledge to access your crypto.

What about Capital Gains Tax on my cryptoassets?

Capital Gains Tax (CGT) is due on your cryptoassets if you dispose of them and the gain minus your costs is greater than your annual tax-free allowance (currently £12,570).

You can read more about how CGT applies to cryptocurrency here.

Will cryptocurrencies be regulated in the UK?

It’s almost certain that further regulation is in the pipeline for cryptocurrency.

Already cryptocurrency firms operating in the UK must comply with Money Laundering Regulations (MLRs) and register with the Financial Conduct Authority (FCA).

You can check the Financial Services Register for both registered firms and unregistered cryptoasset businesses, however the list isn’t exhaustive.

The Financial Conduct Authority (FCA) recently banned the sale of derivatives to retail customers due to the large number of people who were losing money either through lack of understanding of the products or scams.

You Might Also Like
Useful Guides

Disclaimer: This article is for informational purposes only and does not constitute financial or investment advice.

More Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *

Fill out this field
Fill out this field
Please enter a valid email address.
You need to agree with the terms to proceed