Are trusts needed to keep crypto accessible and tax-efficient? Does moving Bitcoin between wallets trigger Capital Gains Tax (CGT)? This guide gives clear, HMRC‑aligned answers on Crypto Trusts & Estate Planning so trustees, executors and individuals can act with confidence.
Key takeaways: what to know in 1 minute
- Wallet-to-wallet transfers are usually not taxable where legal ownership does not change and there is no disposal to a third party. Record the reason and timestamps.
- A transfer becomes a disposal for CGT when beneficial ownership, or consideration, changes — e.g. gifting, sale, exchanging for fiat, or transferring into a trust where legal title passes. Treat custodial moves cautiously.
- Maintaining clear records is essential: transaction hashes, wallet addresses, timestamps, valuations (GBP) at transaction time and supporting exchange records. HMRC expects contemporaneous evidence.
- Transfers to exchanges or custodians often create taxable events if the platform exercises control, sells, or swaps assets. Reporting on self-assessment is required for relevant disposals.
- Using trusts for crypto adds access and probate benefits but alters CGT and IHT treatment; proper drafting (beneficial ownership, powers of appointment, multisig arrangements) is critical to avoid inadvertent disposals.
Are wallet-to-wallet transfers taxable under HMRC rules?
HMRC analysis focuses on the tax position of the person who owns the crypto, not the underlying protocol. A purely internal transfer between wallets owned by the same individual will not normally be taxed as a disposal, because there is no change in beneficial ownership and no consideration received.
Key points:
- HMRC treats disposals as events where ownership or value-realising action happens (sale, gift, exchange, or exchange of one cryptoasset for another). Moving funds between wallets under the same beneficial owner is generally not a disposal.
- Transfers between different legal owners (for example, to a trust where legal ownership passes or to another person) are disposals and may trigger CGT or other tax consequences.
- When transfers cross jurisdictions or involve custodial services, the commercial facts matter: whether the custodian acquires control, whether the transfer is effectively a sale, and whether any consideration was given.
For HMRC official guidance see Tax on cryptoassets.
When a transfer counts as a disposal for CGT
Disposals for CGT occur when a chargeable asset is sold, exchanged, given away, or otherwise ceases to be owned. For Bitcoin and other cryptoassets, HMRC emphasises the underlying economic reality.
Common disposal triggers relevant to crypto trusts and estate planning:
- Gifting to another person (including beneficiaries): this is a disposal at market value for CGT purposes unless an exemption applies.
- Transferring into a trust where legal beneficial ownership changes — depending on the trust type and whether the settlor retains benefits, this may trigger a disposal or be treated as a transfer with special rules.
- Swapping crypto for crypto or for fiat on an exchange: a disposal (and potentially a trading or income event in business contexts).
- Disposal by an exchange/custodian under terms of service (for example forced sales) — treat as disposal by the user unless records show otherwise.
HMRC uses rules to match disposals to acquisitions (same-day, 30-day, and Section 104 pooling). For estate planning, track acquisition costs of assets moved into trusts or handed to executors to compute allowable gains.
Gifting or moving Bitcoin between your wallets: tax impact
- Self-to-self (same beneficial owner): normally not taxable. However, if an individual moves assets into a structure that alters beneficial ownership (for example, a discretionary trust where beneficiaries obtain rights), that move can be a disposal at market value.
- Gifting to a spouse or civil partner: generally exempt for CGT while both are UK residents and no consideration is paid; IHT rules differ.
- Gifting to a third party or into a trust for others: typically a disposal for CGT. For IHT, gifts may be chargeable depending on timing and exemptions.
Practical example: transferring 1 BTC from a personal hardware wallet to a trust where the settlor retains no beneficial interest will usually be a disposal at market value on the transfer date and must be reported if a gain arises above the Annual Exempt Amount.
Record-keeping and evidence for wallet transfers and disposals
HMRC requires adequate records for crypto disposals and acquisitions. For estate and trust situations, records become vital for executors and trustees to establish bases and compute CGT or IHT.
Essential records to keep for every transfer or disposal:
- Transaction hash (TXID), source and destination wallet addresses.
- Date and exact time (UTC recommended).
- Value in GBP at the time of transaction (source: a reputable exchange rate or market snapshot).
- Reason for transfer (personal movement, gift, trust settlement, exchange withdrawal).
- Any correspondence with exchanges or custodians (KYC, account statements).
Evidence for trust transfers should include the trust deed, settlement documents, minutes or declarations showing intention and whether beneficial interest was retained. Where valuations are necessary (for IHT), obtain contemporaneous market evidence.
Practical record examples for executors and trustees
- Export CSV from wallets or block explorers showing TXIDs and timestamps.
- Keep screenshots or PDFs of exchange valuations at the time of transfer with the URL and timestamp.
- Preserve private key custody evidence (multisig signatories list, hardware wallet serial numbers) without storing private keys insecurely.
HMRC guidance on record-keeping for cryptoassets: Tax on cryptoassets.
Transfers to exchanges or custodians: reporting and taxable events
Transfers that involve exchanges or custodians require careful assessment:
- Depositing to an exchange with the same beneficial owner is usually not a disposal, but any subsequent sale, swap or fiat withdrawal is. Exchanges commonly provide timestamps and fiat values — keep those.
- Transferring to a custodial wallet (third-party control) can amount to disposal if the custodian takes legal title or swaps the asset. Review terms of service and custody agreements: legal ownership language matters.
- Cold storage provided by a third party that only holds keys on behalf of the owner and where the owner retains beneficial interest is less likely to trigger disposal, but documentation is essential.
Reporting obligations:
- Report disposals that produce gains on a Self Assessment tax return or through a Capital Gains summary where required.
- Trustees must report disposals by the trust on trust tax returns.
- Executors must value assets at date of death for IHT and compute any post-death disposals for CGT where applicable.
Practical checklist before moving assets to an exchange or custodian:
- Read the platform's custody terms and obtain a copy.
- Record whether the platform issues a receipt only or acts as legal custodian.
- If moving into a trust-managed exchange account, reflect this in trust minutes and record the transfer value.
Avoiding mistakes: common HMRC pitfalls with wallet transfers
Common pitfalls that create unexpected tax liabilities:
- Assuming all wallet moves are non-taxable. Moves that change beneficial ownership or transfer into structures that grant rights to others can be disposals.
- Poor valuation practice. Using hindsight prices or failing to capture GBP values at transaction time makes CGT calculations harder and invites HMRC enquiries.
- Handing executors access without legal clarity. Giving a personal key to an executor without clear legal instruments can create disputes over beneficial ownership and delays in reporting.
- Misunderstanding custodial arrangements. Treat deposits to custodial services as potentially taxable events until terms confirm the customer retains beneficial ownership.
Solutions to these pitfalls:
- Use carefully drafted trust deeds and digital asset schedules that record whether the trust receives legal title or only direction over assets.
- Maintain a contemporaneous valuation log with timestamps and source URLs.
- Adopt multisig arrangements for trust-held crypto to separate access from beneficial ownership and provide clear evidence for HMRC.
How trusts interact specifically with CGT and IHT for cryptoassets
Trusts are powerful estate tools but change tax profiles:
- Capital Gains Tax: transfers into some trusts can be treated as disposals at market value. Trustees are responsible for reporting disposals by the trust and paying any trustee CGT due. Trustees benefit from the trust annual exemption, not the individual's exemption.
- Inheritance Tax: transfers into some trusts may be potentially exempt transfers or chargeable lifetime transfers depending on trust type and timing. IHT rules are complex for trusts holding high-value crypto and require early advice.
Selecting the correct trust form and drafting digital-asset clauses is critical. Clauses should state who holds private keys, who can sign transactions, and how valuations and reporting are to be handled.
Comparative table: custody options, access and tax implications
| Custody model |
Access & control |
Typical tax consequence for transfers |
Suitability for trusts |
| Self-custody (personal hardware wallet) |
Owner retains keys and beneficial ownership |
Moving between own wallets: usually no disposal; gifting: disposal at MV |
Good for simple estates but risky for executors if no access plan |
| Custodial exchange account |
Platform may control keys; terms vary |
Deposits may be non-disposals; sales/swaps are disposals; platform actions can create disposals |
Use with clear contractual custody terms; not ideal as sole trust repository |
| Third-party custody (institutional) |
Custodian may act as legal custodian |
Depends on contract; if custodian holds title, transfer may be disposal |
Appropriate if trust deed aligns with custody and tax reporting |
| Crypto held inside a legally established trust |
Trustee control via deed and multisig |
Transfer into trust often a disposal at MV; trustee CGT rules apply |
Best for succession planning when drafted correctly and combined with access arrangements |
Practical step-by-step for trustees and executors (how to preserve tax position)
- Step 1: Identify ownership and evidence. Locate private keys, wallet addresses, exchange accounts and extract transaction histories.
- Step 2: Record valuations at date of transfer or death. Use documented exchange rates and screenshots.
- Step 3: Confirm legal status before moving assets. Determine whether transfers change beneficial ownership.
- Step 4: Draft or locate trust/will clauses for digital assets. Specify signatories, access procedures and valuation methods.
- Step 5: Report disposals and pay taxes on time. Trustees file trust returns; executors calculate IHT and CGT as needed.
Advantages, risks and common mistakes
✅ Benefits / when to apply
- Trusts provide continuity of access for executors and beneficiaries.
- Properly drafted trusts can reduce probate complexity and speed asset distribution.
- Trusts allow orderly management of tax reporting (trustees are responsible for reporting disposals and gains).
⚠️ Errors to avoid / risks
- Inadequate drafting that confers unintended beneficial ownership and triggers disposals.
- Failure to record valuations and transaction evidence, leading to incorrect CGT calculations.
- Storing private keys insecurely while documenting them poorly, exposing estate to loss or theft.
[Visual process] How to handle a transfer into a trust (simple flow)
Process: transferring crypto into a trust
🔍
Step 1 → Identify asset, wallet and current beneficial owner
🧾
Step 2 → Record TXID, timestamp and GBP valuation
🖋️
Step 3 → Execute trust deed/settlement documents
🔐
Step 4 → Transfer to trustee-controlled address (multisig recommended)
📣
Step 5 → Report disposal if applicable; keep records for IHT/CGT
FAQ: frequently asked questions
Are transfers between personal wallets taxable?
If the beneficial owner remains the same and no consideration is paid, such transfers are usually not disposals for CGT.
Does moving crypto into a trust always create a disposal?
Not always, but frequently. If beneficial ownership passes or rights change, HMRC will likely treat it as a disposal at market value.
What records should an executor keep for crypto in an estate?
Transaction hashes, wallet addresses, timestamps, GBP valuations at relevant dates, exchange statements and trust/will documents.
If an exchange holds the crypto, who reports the disposal?
The beneficial owner (or trustee/executor acting for the estate) is responsible for reporting disposals; exchanges may provide reports but do not substitute tax filings.
Can a multisig trust wallet avoid probate delays?
Multisig can help access and control, but legal documentation (trust deed and appointment powers) is necessary to avoid disputes and to clarify tax treatment.
How are gains calculated for crypto received as inheritance?
Assets are valued at the date of death for IHT; for CGT after death, the deceased's estate may receive the base value at date of death and disposals by beneficiaries are measured from that base.
Where to find HMRC guidance on crypto and trusts?
See HMRC’s tax on cryptoassets overview: Tax on cryptoassets.
Your next step:
- Obtain and secure full transaction histories and valuations for all cryptoassets.
- Review or draft trust/will clauses that explicitly address private key custody, multisig signatories and valuation/reporting procedures.
- If transfers into a trust are contemplated, obtain specialist tax and trust advice and prepare contemporaneous evidence for HMRC.