Are trustees or executors managing an estate that contains Bitcoin and other cryptoassets? Not knowing how to value, report or transfer these assets can expose fiduciaries to tax errors, delays in probate and liability. This guide sets out concise, practical steps and HMRC‑aligned rules so trustees and executors can act with confidence.
Key takeaways: what trustees and executors must know in one minute
- Determine the tax status on death quickly: crypto in the deceased's name is part of the estate for Inheritance Tax (IHT) and must be valued at the date of death for probate and reporting to HMRC.
- Apply Capital Gains Tax (CGT) rules at disposal: disposals by executors or trustees usually trigger CGT using the market value at the date of death as the base cost for beneficiaries.
- Document price evidence: keep time‑stamped exchange records, blockchain snapshots and a clear audit trail; HMRC expects verifiable price evidence at the relevant timestamp.
- Consider structure options: trusts, companies and LLPs have different tax outcomes — compare IHT, income tax and CGT before choosing.
- Report and pay on time: include crypto disposals in the estate’s or trustee’s tax returns and notify HMRC where required; late reporting risks penalties.
How capital gains tax applies to bitcoin held by a deceased person
When a person dies owning Bitcoin, the assets form part of their estate for IHT purposes and must be valued at the date of death. For CGT, a notional disposal occurs for beneficiaries when the assets are later disposed of (or when the personal representatives dispose of them on behalf of the estate).
- If executors sell Bitcoin during administration, the estate is liable for CGT on the gain measured from the value at date of death to the sale proceeds.
- If assets are distributed to beneficiaries during administration, the personal representatives must use the market value at distribution to determine any subsequent beneficiary gain.
Example (simplified):
- Date of death value: £40,000 (market value at 2025‑12‑01)
- Executor sells later for £55,000
- Taxable gain = £15,000 less any allowable costs and reliefs
Executors should use contemporaneous market prices from reputable exchanges with time‑stamped evidence. HMRC accepts a range of sources provided the methodology is defensible. For guidance see HMRC: Cryptoassets manual.
How to calculate gains in multi‑wallet or cold storage cases
- Reconcile each wallet or custodial account separately.
- Use blockchain explorers to confirm transaction timestamps where exchanges lack records.
- Treat transaction fees and reasonable disposal costs as deductions from proceeds.
Using ISAs and SIPPs for crypto investments: what trustees should consider
Trusts cannot hold ISAs in the trustee’s name in the same way individuals do. A few practical points:
- ISAs and SIPPs are personal wrappers and cannot commonly be owned by discretionary or bare trusts in the way an individual holds them. Trustees administering an estate cannot transfer assets into a deceased person’s ISA or SIPP.
- Where a deceased had an ISA or SIPP that included crypto exposure via approved funds or platforms before death, follow the provider’s probate procedures and value the fund at the date of death for IHT and future CGT.
- Trustees should check whether the crypto exposure is direct (unwrapped holdings) or wrapped (exchange‑listed trusts, ETFs). Wrapped products retain their tax wrapper characteristics and are treated according to standard trust and pension rules.
For advice on pensions and ISAs, refer to the provider’s probate guidance and HMRC rules: GOV.UK: Valuing an estate.
Reporting bitcoin transactions to HMRC: what counts and how to evidence it
Reporting depends on whether the personal representatives sell assets or the beneficiaries do.
- If the estate sells Bitcoin, the estate must include the gain in the estate's tax computations (Self Assessment for executors or the estate tax return).
- If the executor transfers crypto into the beneficiaries' names without sale, include a clear valuation record at the point of transfer; beneficiaries will use that as their acquisition cost for CGT when they later dispose.
Essential evidence for HMRC:
- Time‑stamped exchange or custodial statements showing price and volume
- Blockchain transaction hashes where relevant
- Wallet export (public addresses and corresponding balances) with screenshots and timestamps
- Correspondence with exchanges or custodians (use the template language provided by the estate solicitor)
To contact HMRC for specific queries, use their online channels and include a full audit trail: Contact HMRC.
What counts as a disposal for HMRC
Disposals include: selling for fiat, exchanging Bitcoin for other crypto, using Bitcoin to buy goods or services or gifting to another person (unless transferring to a beneficiary as part of estate distribution, which uses valuation rules above).
Choosing between trusts, companies and LLPs for holding bitcoin: comparative table and decision points
When trustees consider whether to hold crypto in a trust, recommended structure or through a company/LLP, tax outcomes vary. The table below summarises key differences relevant to trustees and executors handling estate planning or administration.
| Structure |
IHT treatment |
Income tax |
CGT / disposal |
| Bare trust |
Assets treated as belonging to beneficiary for IHT |
Beneficiary taxed on income |
CGT on beneficiary disposal using original cost |
| Discretionary trust |
Potential IHT charges; periodic and exit charges apply |
Trustees pay income tax at trust rates |
Trustees liable for CGT with special trust rates and allowances |
| Company |
Shares subject to IHT based on value; assets held by company not directly in estate |
Company pays corporation tax on trading income; directors/shareholders taxed on dividends |
Company disposal may trigger corporation tax; extraction of value attracts personal tax |
| LLP |
Partners taxed individually for IHT on their share |
Profits taxed as income of partners |
Partners taxed on gains on disposal |
Key decision points for trustees and executors:
- If preservation of assets for beneficiaries with minimum tax leakage is the priority, bare trusts can be administratively simpler but must be set up correctly before death.
- Discretionary trusts offer control but add IHT and reporting complexity — consider only where control outweighs tax costs.
- Operating through a company may suit trading activity (mining, staking operations) but requires careful planning for exit and extraction taxes.
Consult specialist trust and tax counsel before restructuring assets during administration. See the Law Commission’s materials on digital assets: Law Commission: Digital assets.
Minimising tax on bitcoin mining and staking income for estates and trustees
Mining and staking income can be taxable as either trading income or miscellaneous income depending on the facts:
- If activities are carried out commercially (scale, organisation, profit motive), income is likely trading income subject to income tax (or corporation tax if via a company).
- Isolated staking rewards without commercial scale may be miscellaneous income taxed as income when received.
For estates and trustees:
- If the deceased ran a mining operation, treat receipts as part of the estate’s income and include in the estate accounts; trustees must determine whether to continue operations or realise assets.
- Mining/staking receipts received after death by the estate are taxable to the estate or trustees at trust rates; consider whether immediate sale reduces ongoing tax exposure.
Practical tips to minimise tax exposure:
- Keep mining/staking operations separate from personal funds; document costs and capital allowances.
- Consider winding down operations during administration to avoid ongoing income tax complexity unless continuing is commercially justified.
- Use a company for ongoing commercial mining only after professional tax advice; corporation tax plus extraction taxes can still be efficient in some scenarios.
Using the CGT allowance when disposing of bitcoin: practical steps for personal representatives
Each tax year individuals and trustees have different CGT allowances. Trustees and personal representatives should apply allowances correctly:
- The estate/trust has its own tax-free allowance and reporting regime. Where the executor sells assets within the deceased’s final tax year, the deceased’s own CGT annual exemption may apply if disposal falls within that tax year.
- Trustees must consider the tax year of disposal; use the relevant CGT annual exempt amount for the entity (estate allowance differs from individual allowances).
Practical steps:
- Determine whether the disposal date falls within the deceased’s final tax year; if so, assess whether the deceased’s unused annual exemption can reduce CGT.
- Check the estate’s own reporting obligations and available exemptions before applying trustee CGT allowances.
- Record the base cost as market value at date of death if the deceased owned the Bitcoin outright.
Practical checklist and timeline for executors handling cryptoassets
- Locate private keys, hardware wallets and exchange accounts. Check wills or separate keyholder instructions.
- Secure access: use multi‑sign arrangements and legal directions for custodians where required.
- Value assets at date of death: compile price evidence and snapshots.
- Decide whether to sell or transfer: balance tax, probate timing and beneficiary wishes.
- Prepare estate accounts, report gains and pay any tax due.
Suggested timeline for a typical estate administration (indicative):
- Week 1–2: Locate assets and secure wallets/custodial accounts.
- Week 3–6: Obtain valuations and notify probate registry as needed.
- Month 2–4: Decide on sale or distribution; execute transfer/sale with full records.
- Month 3–6: File required tax returns and pay CGT/IHT where applicable.
Recovery and access note: If private keys are lost, treat the asset as irrecoverable for probate valuation unless recovery steps succeed. Keep detailed records of recovery attempts.
Executor flow: crypto handling in 6 steps
🔎 Step 1 → Locate wallets & custodians
🔐 Step 2 → Secure access (keys, multi‑sig)
📊 Step 3 → Value assets at date of death
⚖️ Step 4 → Decide: sell, retain or distribute
🧾 Step 5 → Prepare tax calculations & reports
✅ Step 6 → Apply proceeds according to will and pay taxes
Advantages, risks and common errors for trustees and executors
Benefits / when to apply ✅
- Clear valuation and sale early reduces price volatility risk.
- Using professional custodians during administration reduces security and legal risk.
- Formalising crypto in estate planning ahead of time prevents probate delays.
Errors to avoid / risks ⚠️
- Failing to obtain time‑stamped price evidence for HMRC.
- Selling without proper authorisation from probate or beneficiaries (legal exposure).
- Losing private keys due to poor custody practices.
- Treating staking/mining rewards incorrectly as non‑taxable.
Questions frequently asked by trustees and executors
Do trustees need to pay inheritance tax on bitcoin?
Yes. Bitcoin owned by the deceased is part of the estate for IHT and must be valued at the date of death for IHT purposes.
How should executors value bitcoin for probate?
Use a documented market value at the date of death supported by exchange statements or blockchain evidence; keep multiple sources where possible.
Can an estate use the deceased's CGT allowance for disposals?
If disposals occur within the deceased's final tax year and are applicable, the deceased's unused CGT annual exemption may be relevant. Seek specialist tax advice for precise application.
Is mining income received after death taxable to the estate?
Yes. Income generated after death by mining or staking is taxable to the estate or trustees and must be accounted for in the estate accounts.
Should trustees register crypto with HMRC separately?
Trustees must include crypto transactions in the normal tax returns (estate or trustee returns) and provide details where required. Use HMRC channels for specific queries.
How should lost private keys be reported in estate accounts?
Record the asset as irrecoverable after documented recovery attempts; valuation should reflect recoverability and be explained in estate accounts.
Are NFTs treated the same as bitcoin for probate?
NFTs are assets for probate and tax, but valuation and disposal method differ; treat them similarly for inclusion in the estate but obtain specific valuation evidence.
- Gather: make a list of likely custodians, exchanges, wallet addresses and look for keyholder instructions in the deceased’s papers.
- Secure: freeze accounts where necessary, request temporary access from custodians using probate documentation and preserve all correspondence.
- Value and document: capture market values at date of death, export exchange statements, capture blockchain transaction IDs and prepare the estate tax working papers.
Written by Alan White — a UK‑based crypto tax researcher specialising in HMRC guidance, cryptoasset taxation and self‑assessment reporting for individuals and businesses.