Giving Bitcoin can create a UK tax bill before IHT planning takes effect. Transfers to a spouse or civil partner are usually CGT-free. Gifts to children, relatives, friends and many trusts can trigger CGT at market value. Keep the date, value, wallet transaction and original purchase cost.
Bitcoin gifts can trigger CGT before IHT matters
A Bitcoin gift to anyone except a spouse or civil partner is normally a disposal for CGT purposes. HMRC works out the gain as if you sold it at market value.
If you bought 0.5 BTC for £12,000, it may later be worth £42,000. If you gift it then, the starting gain is £30,000. Allowable costs and qualifying losses may cut that figure. Check current CGT rates and allowances through GOV.UK.
An outright gift to an individual is often a Potentially Exempt Transfer (PET). It may become exempt from IHT after seven years. You must keep no benefit from the gift. That later IHT result does not remove CGT due on the transfer date.
One transfer can create two tax timelines. CGT is considered on the day Bitcoin leaves the donor’s ownership. IHT may depend on surviving for seven years. It also depends on keeping no benefit from the gift.
For IHT, a PET is not ignored before seven years have passed. If the donor dies within seven years, HMRC adds the Bitcoin gift back into the IHT calculation.
HMRC considers earlier lifetime transfers, usually in date order. The standard nil-rate band is currently £325,000 for many estates. Earlier gifts may use this band before HMRC assesses the estate.
Taper relief can cut IHT due on a failed PET. It applies where death occurs more than three years after the gift. It does not cut the transfer’s value.
A retained benefit can keep the gift in the estate after seven years.
The recipient determines CGT, IHT and base cost
The type of recipient determines which tax rules apply. These can include spouse relief, market-value rules, charity relief and trust rules. The recipient also affects the future cost basis.
| Recipient | Donor CGT at transfer | Likely IHT treatment | Recipient’s future base cost |
|---|
| Spouse or civil partner | Usually no gain, no loss | Usually exempt between spouses | Donor’s original pooled cost |
| Child, relative or friend | Market-value gain or loss | Usually PET, seven years relevant | Market value on gift date |
| Qualifying charity | May qualify for relief | Usually outside estate if valid | Charity-specific rules |
| Most trusts | Market-value rules often apply | May be a chargeable lifetime transfer | Depends on trust rules |
Spouse transfers can defer the gain
A transfer to a spouse or civil partner is usually no gain, no loss. This means no immediate CGT. The recipient takes on the donor’s original pooled cost. Unmarried partners do not qualify.
Children and friends receive market value
For a child, adult relative or friend, the donor usually works out CGT at market value. The recipient’s future base cost is usually that same GBP value. A genuine personal gift usually creates no Income Tax for the recipient.
Charities and trusts need separate checks
A gift to a qualifying charity may qualify for CGT relief. A gift into most trusts may be a chargeable lifetime transfer, not a PET. Check the recipient’s status and trust deed before sending Bitcoin.
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Market value matters even when no pounds change hands. A gift to a connected person is usually treated as a CGT disposal at market value. Connected people include children and close family members.
A gift to an unconnected friend is not a bargain made at arm’s length. Market-value treatment will usually still apply. There is a downside when Bitcoin has fallen in value.
A capital loss on a gift to a connected person is usually restricted. You may only set it against gains from disposals to that same person.
Keep the relationship, valuation source and wallet transaction in your crypto tax records.
Record the value HMRC may ask you to prove
A defensible gift needs proof of transfer and ownership. It also needs a reliable GBP value at the exact time Bitcoin moved.
Fix the GBP value at the exact time
Record the date, time, Bitcoin amount and GBP value. Use a reputable exchange source. Keep a screenshot or export. Review HMRC’s Cryptoassets Manual and valuation guidance.
Keep an evidence pack for both people
Keep the transfer addresses and transaction hash. Keep valuation evidence, purchase records and pooled-cost records. Write a brief statement naming the recipient and confirming the gift. State that no payment was made.
Clear records can prevent a later dispute with HMRC.
Avoid hidden tax traps in estate planning
Estate planning can fail if the donor keeps control. It can also fail if Bitcoin represents income. Some facts do not fit the simple gift rules.
A gift with reservation of benefit may arise if you give Bitcoin away but retain the only seed phrase. It may also arise if you retain practical control. The recipient should genuinely control the Bitcoin.
Staking rewards and lending yield can create Income Tax first. Employment-related transfers can also create Income Tax or National Insurance. Giving Bitcoin away does not remove earlier reporting duties.
The most frequent error is treating wallet access as separate from ownership. In practice, sole control of the seed phrase can undermine the gift.
This general guidance may not fit a non-UK resident spouse. It may also not fit company transfers, paid commercial arrangements or employment-related Bitcoin. Certain trusts, DeFi, staking, lending, wrapped tokens and yield need separate checks. Large gifts, gifts shortly before death and personal IHT planning need tailored advice. Speak to a UK crypto tax adviser or solicitor.
Make the transfer only after these checks
Identify the recipient and value the Bitcoin first. Work out potential CGT and prepare records before broadcasting the transaction.
A short pre-transfer decision list
Check whether the recipient is a spouse, individual, charity or trust. Check whether payment, employment or yield means this is not a genuine gift.
Get help before an irreversible transfer
For substantial, overseas or trust gifts, get written UK advice before transferring. The advice should cover CGT, IHT, wills, probate access and private-key arrangements.
Bitcoin transfers cannot usually be reversed after confirmation.
FAQs
Is receiving crypto as a gift taxable in the UK?
Usually, a genuine personal gift creates no Income Tax. CGT may arise when the recipient later sells, swaps or spends the crypto.
Can you gift crypto tax-free in the UK?
Usually not. Gifts to most people are market-value CGT disposals for the donor. Spouse transfers and some charity gifts can differ.
Is gifting bitcoin to my spouse CGT-free?
Usually yes, if marriage or civil partnership conditions are met. The couple must also meet the living-together conditions. The recipient usually takes the donor’s original cost basis.
Does the seven-year rule remove CGT on a bitcoin gift?
No. The seven-year rule concerns IHT. HMRC calculates CGT when Bitcoin is transferred.
What if HMRC disputes my bitcoin valuation?
Keep the exact-time exchange source and a screenshot. Keep the transaction hash and your GBP calculation. These records support the value used.
What is the recipient’s cost basis after a gift?
For a normal gift, it is usually market value on the gift date. A qualifying spouse transfer usually carries over the donor’s pooled cost.
Should a non-resident gift bitcoin to avoid UK tax?
Not without tailored advice. Domicile, residency, ownership and spouse-exemption rules can change the tax result.
Further reading
If you want to learn more about this topic, these sources may interest you:
