Crypto can outlive its owner, while records, proof of ownership, or a hardware wallet remain out of reach. In the UK, crypto normally forms part of the estate for IHT at death. This applies even when executors cannot access it at once.
Crypto inheritance tax UK at the date of death
Crypto held personally normally counts for Inheritance Tax (IHT) at its market value on death. IHT is a tax on the estate, which means everything a person owned when they died.
Bitcoin, Ethereum, NFTs, staking balances, and exchange-held tokens can all be estate assets. The key question is beneficial ownership. This means who truly owned and controlled the crypto.
Assets held for a company, partnership, client, or relative may be treated differently. The usual nil-rate band is £325,000. IHT is often charged at 40% above available bands and exemptions.
Crypto is valued on death, not when it was bought.
A spouse or civil partner can often inherit without IHT. Other reliefs may also apply. The result depends on the whole estate, not just the wallet balance.
Valuing bitcoin on the death date
Executors should record token amounts, wallet addresses, exchange accounts, price sources, times, and sterling values on the death date. These records show HMRC how the estate reached its figure.
A £300,000 Bitcoin holding enters the estate at £300,000. This remains true even if it cost £25,000. The original purchase price does not set the IHT value.
A beneficiary who later sells for £340,000 usually starts CGT from the death-date value. This can create a £40,000 gain. CGT means Capital Gains Tax, a tax on value growth.
HMRC's Cryptoassets Manual gives useful context on crypto tax treatment. It does not replace evidence of the actual death-date value.
The most common error here is using today's price instead of the death-date price. A volatile token can move sharply within hours. Record the source and time used.
Executors: find, value and report crypto safely
Executors need proof that crypto exists. They also need a safe route to recover it. Probate papers must not expose passwords or wallet keys.
An executor is the person who deals with the estate after death. Probate is the legal process that confirms their authority. Crypto creates security risks that shares and bank accounts usually do not have.
IHT is generally due by the end of the sixth month after death. The estate may need cash before a crypto sale can be completed. This can be hard when the wallet is locked.
Keep proof of ownership separate from access secrets.
Build evidence without exposing keys
Create an inventory of exchange accounts, public wallet addresses, hardware wallets, phones, laptops, email addresses, and bank payments. Include transaction exports where possible. This helps executors find assets and prove ownership.
Record where recovery instructions are kept. Do not put seed phrases or private keys in the will. A seed phrase is like a master house key for the whole wallet.
Anyone with a seed phrase can usually move every asset in that wallet. A will becomes public after probate in many cases. That makes it the wrong place for secret access details.
A common case involves a hardware wallet found in a desk drawer. The executor also finds old exchange emails. The estate can report the assets, but recovery still depends on the secure backup instructions.
Preserve devices and exchange access
Do not wipe the deceased's phone before checking authenticator apps and exchange notices. Do not cancel their mobile number too early. Do not reset email access before checking recovery routes.
Exchanges may ask for a death certificate, grant of probate, executor ID, and account evidence. Each exchange has its own process. Start the request early because reviews can take time.
Use GOV.UK's Inheritance Tax guidance for forms and reporting routes. Keep copies of each exchange statement and support request.
| Event | IHT position | CGT position | Key record |
|---|
| Death | Value enters estate | Usually no death charge | Death-date price and holdings |
| Transfer to beneficiary | Already considered in estate | Usually no disposal | Probate valuation |
| Estate sells crypto | Sale may fund IHT | Gain since death may arise | Trade confirmation |
| Beneficiary sells crypto | No new IHT on sale | Gain from death-date value | Sale price and valuation |
Income Tax is separate from IHT and Capital Gains Tax. Death itself does not usually create an Income Tax charge. Passing crypto to a beneficiary also does not usually create one.
The estate may receive staking rewards, lending returns, mining income, or other token income later. Personal representatives may then have income reporting duties. Keep reward dates, token amounts, sterling values, and platform statements.
Staking tax can depend on the facts and the type of activity. Think of it as income that may arise after estate administration begins. It needs its own records.
This separates tax on crypto held at death from income earned afterwards.
For crypto probate, keep wallet records apart from secure access material. A full IHT account may need form IHT400. Support values with exchange statements, blockchain records, bank transfers, and a recorded valuation method.
In England and Wales, the IHT421 probate summary may also apply. The right form depends on the estate and probate route.
These papers should list holdings and provide evidence of ownership. They must never contain a seed phrase or private key. Only approved executor contacts should hold recovery instructions.
Offshore crypto, trusts and the 2025 rules
From 6 April 2025, IHT on overseas assets can depend on the long-term UK resident test. This replaced the older approach based mainly on domicile.
A foreign exchange account does not automatically put Bitcoin outside UK IHT. Broadly, someone becomes a long-term UK resident after UK residence in 10 of 20 tax years. This can bring overseas crypto within IHT.
Executors should check residence history, ownership, and key dates. An exchange address alone does not decide the tax result. A wallet has no simple physical home like a house.
Where the platform is based is rarely the full answer.
The long-term UK resident test needs a wider review than the year of death. Leaving the UK does not always end IHT exposure at once. The connection can continue for a tail period.
That tail can last up to 10 tax years for someone with a long UK residence history. This area needs care where the deceased moved abroad or held foreign assets.
Trusts need separate advice
Trusts can change who owns crypto for tax purposes. They can also change when IHT charges arise. A trust is a legal arrangement where trustees hold assets under set rules.
A trust is not simply a wallet known by several family members. The legal documents matter. So do the settlor, trustees, and people who may benefit.
For trusts, overseas crypto can depend on the settlor's long-term UK resident status. The location of trustees, wallets, or exchanges may not settle the issue.
Most guides focus on the exchange location. What they often miss is the owner's residence history. That history can matter more than where the app is registered.
Dated inventories and clear ownership records are useful. Early specialist advice is better than late planning with trusts, gifts, or foreign holdings.
Gifts, wills and cash for the IHT bill
Lifetime crypto gifts may reduce IHT. But they can trigger CGT. They can also fail if the donor keeps control or benefit.
A gift is not complete just because a token moved on a blockchain. The donor must truly give up control. Think of handing over a car while keeping the only key.
Planning should start while the owner can explain each wallet and backup method. Waiting until illness or death can leave executors with too little proof.
Avoid the reservation-of-benefit trap
A crypto gift can be a potentially exempt transfer. It may fall outside IHT after seven years. The donor must survive and keep no benefit.
The donor should not keep effective control over the wallet or its proceeds. Keeping a usable seed phrase can show retained control. Directing trades or receiving staking yield can also matter.
The final result depends on the security setup and the facts. Giving Bitcoin usually counts as a CGT disposal at market value on the gift date.
This works well in theory, but shared wallet access often causes problems. If the donor can still move tokens, the gift may not achieve its IHT aim.
Make the will practical and fund the bill
Your will should appoint capable executors. It should point to separate, secure crypto instructions. Do not place passwords, private keys, or seed phrases in the will.
Review the plan when exchanges, wallets, devices, beneficiaries, or security methods change. A will can stay valid while its crypto instructions become useless. Update the separate record as your setup changes.
The will should also identify estate cash for IHT. Crypto values can move quickly. Assets can also remain locked while tax deadlines approach.
For most UK crypto holders, the best plan is simple. Keep a current asset list, keep keys secure, and name executors who understand the process. Gifts can help, but only where control really ends and CGT has been reviewed. Offshore holdings, trusts, and large estates need advice before any transfer. A clear record now can prevent an avoidable tax dispute later.
If your estate may exceed available IHT bands, ask a UK tax adviser and solicitor to review it. This is especially useful before making a large crypto gift. The review should cover the will, ownership, access, and likely tax bill.
This guide does not replace a solicitor, tax adviser, or probate specialist. Get advice where there are trusts, businesses, overseas residence, offshore assets, large estates, disputed heirs, lost keys, or unclear ownership. The analysis also changes if crypto belonged to a company, partnership, or third party.
Your questions answered
Can crypto avoid inheritance tax?
No, crypto is not automatically exempt from IHT. Gifts, spouse exemptions, and careful will planning may help. A gift normally needs seven years and no retained benefit to fall outside the estate.
What if an executor loses private keys?
The asset may still need reporting if evidence shows it existed at death. Seek recovery, valuation, and legal advice quickly. Lost access does not remove the duty to disclose relevant assets.
Genuine inaccessibility may affect open-market value. Recovery prospects and available evidence can also matter. Keep all records of failed recovery attempts.
Do beneficiaries pay tax when receiving bitcoin?
Usually, no CGT arises just because a beneficiary receives Bitcoin from an estate. Their CGT base cost is normally the market value on the death date. Tax may arise when they later sell or swap it.
Can HMRC see private-wallet crypto?
HMRC can use exchange data, bank records, blockchain analysis, and international information sharing. Executors must disclose relevant assets. This applies to exchange holdings and private wallets.
Does the 30-day rule apply to inherited crypto?
The CGT 30-day matching rule can matter after a sale and repurchase. It applies to the same type of token within 30 days. It does not replace the death-date value for inherited assets.
Should I put my seed phrase in my will?
No, do not put a seed phrase, password, or private key in a will. Put secure access instructions elsewhere. Let the will point executors to that protected record.
The safest next move for your estate
Create a crypto inventory and record a secure recovery route. Give trusted executors enough detail to find each holding. Do not expose keys in the will or probate forms.
If your estate includes offshore crypto, trusts, or IHT above available bands, seek UK advice early. A tax adviser and solicitor can check the plan before death creates rushed choices. This is often cheaper than trying to rebuild records later.
A good crypto estate plan lets executors find assets without giving strangers the keys.
