Cryptoassets form part of your estate and are chargeable to inheritance tax at 40% above the available nil rate bands. There is no relief specific to crypto, and business property relief does not shelter a personal investment portfolio. The distinctive risk is operational rather than fiscal: HMRC assesses the value at the date of death, and the tax is payable, whether or not anybody living can access the wallet.
Substantial crypto estates have been left permanently unrecoverable while the inheritance tax on them remained legally due. Estate planning for crypto is therefore two exercises running in parallel: the tax position, and the succession mechanics.
How inheritance tax applies to crypto
| Element | Position |
|---|---|
| Rate | 40% on the value above available nil rate bands; 36% where at least 10% of the net estate passes to charity |
| Nil rate band | £325,000, transferable between spouses and civil partners |
| Residence nil rate band | Up to £175,000 where a qualifying residence passes to direct descendants, tapered away for estates above £2m |
| Spouse or civil partner | Exempt without limit where the recipient is a long-term UK resident. Where the transferor is a long-term UK resident and the recipient is not, the exemption is capped at the nil rate band in force at the date of transfer — domicile is no longer the test |
| Business property relief | Not available for a personal investment holding of cryptoassets |
| Lifetime gifts | Potentially exempt transfers, falling out of the estate after seven years, with taper on the tax where the value exceeds the nil rate band |
| Valuation | Open market value at the date of death, in sterling |
| Capital gains on death | No CGT charge on death; beneficiaries acquire at probate value, so the gain to date of death is effectively wiped out |
That last row is important and frequently missed. Death is not a disposal for capital gains purposes, and the estate takes the assets at market value at the date of death. A long-held position sitting on a very large unrealised gain can therefore pass with the CGT extinguished, and only inheritance tax to consider.
Are your crypto assets within the UK inheritance tax net at all?
From 6 April 2025 the UK replaced the domicile-based inheritance tax system with a residence-based one. The concept that governs is long-term residence: broadly, an individual who has been UK resident for at least ten of the previous twenty tax years is chargeable on their worldwide estate. Those who are not are chargeable only on UK situated assets.
For cryptoassets that distinction runs straight into HMRC's situs view. HMRC's published position at CRYPTO22600 of the Cryptoassets Manual is that an exchange token is located where its beneficial owner is resident. The practical consequences:
- A UK resident holds UK situated tokens, whatever exchange or jurisdiction they sit in. Moving coins offshore does not move them out of the net.
- A non-resident who is not a long-term resident holds non-UK situated tokens, which are generally outside the charge.
- A former long-term resident who has left the UK remains within the charge on worldwide assets for a graduated tail: three tax years for someone resident in ten to thirteen of the previous twenty, rising by one year for each further year of residence, to a maximum of ten. See leaving the UK with crypto.
HMRC's situs analysis is guidance rather than statute and has been questioned, particularly for tokens held through a non-UK custodian. Where a large estate turns on the point, it needs to be considered properly rather than assumed either way.
The access problem, and how to solve it without creating a new one
A will can leave crypto to a beneficiary. It cannot give them the private key. The two failure modes are opposite and both are common: the executors cannot access anything, or the seed phrase is written into a document that becomes public.
Never put a seed phrase or private key in your will. A will admitted to probate in England and Wales becomes a public document, readable by anyone. A will containing a seed phrase is a published instruction for taking the assets.
What works instead:
- An asset schedule, kept separately from the will. What exists, where it is held, what type of wallet, which exchanges, and whether custodial or self-custody. No secrets, just an inventory, so the executors know what they are looking for.
- Key material held under a separate, controlled arrangement — a solicitor's safe custody, a bank deposit box, a purpose-built inheritance mechanism offered by a custodian, or split custody across trusted parties. Referenced by the schedule, not contained in it.
- Written instructions the executors can actually follow, including hardware wallet models, whether a passphrase exists, and any multi-signature arrangements.
- Review after every material change. New wallet, new exchange, new hardware, new passphrase.
- Tell the executors that crypto exists. They cannot search for something they do not know about, and an omitted asset is still a tax liability.
Valuation and reporting for probate
Executors must report the open market value in sterling at the date of death. In practice that means a documented price source for each token at that date, applied consistently, together with a schedule of every wallet and exchange account and its balance. Illiquid and low-volume tokens need a reasoned basis rather than the first figure available.
Inheritance tax on the estate is generally due six months after the end of the month of death, and interest runs after that. Crypto's volatility makes this uncomfortable: the liability is fixed by reference to the date-of-death value, so if the market has since fallen the estate can owe tax on value that no longer exists. Relief for assets sold at a loss shortly after death exists for some categories of asset, but the rules are narrow and do not offer a general remedy for cryptoassets.
Reducing the exposure while you are alive
- Lifetime gifts. A gift is a potentially exempt transfer that leaves the estate after seven years. Remember it is also a disposal for capital gains tax at market value, so the CGT cost of giving has to be weighed against the inheritance tax saved.
- Spouse and civil partner transfers. No gain, no loss for CGT, generally exempt for inheritance tax, and they preserve a second nil rate band.
- Charitable giving. Ten per cent or more of the net estate to charity reduces the rate on the rest from 40% to 36%.
- Trusts. Possible for cryptoassets, with entry, ten-year and exit charges to consider, and real practical questions about how a trustee holds keys.
- Company structures. Rarely helpful for a pure investment holding, and incorporation is itself a disposal at market value.
- Pensions. Note that from 6 April 2027 unused pension funds are expected to be brought within the inheritance tax net, which changes the long-standing planning assumption that pensions sit outside the estate.
Mainstream UK SIPP providers do not generally permit direct holdings of cryptoassets, and indirect exposure through listed products has its own permitted-investment questions. Do not assume a pension wrapper is available.
Frequently asked questions
Is cryptocurrency subject to inheritance tax in the UK?
Yes. Cryptoassets are property and form part of the estate, chargeable at 40% above the available nil rate bands. There is no crypto-specific relief, and business property relief does not apply to a personal investment portfolio.
What happens to my crypto when I die?
It passes under your will or the intestacy rules like any other asset, and it is valued for inheritance tax at the date of death. The difficulty is practical: if nobody can reach the private keys, the assets are unrecoverable while the tax on them remains legally payable. That is why an asset schedule and a controlled key-custody arrangement matter more than the structuring.
Should I put my seed phrase in my will?
No, never. A will admitted to probate becomes a public document. Anyone who reads it could take the assets. Keep an asset schedule separately from the will, and hold key material under a separate controlled arrangement that the schedule points to.
Do my beneficiaries pay capital gains tax on inherited crypto?
Not on the gain that accrued during your lifetime. Death is not a disposal for capital gains purposes and beneficiaries acquire the assets at their probate value, so that gain is effectively wiped out. They will pay CGT only on any increase in value after the date of death, when they eventually dispose.
I have left the UK. Is my crypto still within UK inheritance tax?
Possibly, for between three and ten years. Since 6 April 2025 the test is long-term residence rather than domicile: if you were UK resident for at least ten of the previous twenty tax years, worldwide assets including crypto stay within the charge. The tail after departure is graduated, starting at three tax years for someone resident in ten to thirteen of the previous twenty and rising by one year for each further year of residence, to a maximum of ten.
Does holding crypto on an offshore exchange keep it out of my UK estate?
No. HMRC's published view is that an exchange token is situated where its beneficial owner is resident, so a UK resident's tokens are UK situated wherever the exchange sits. The location of the platform, wallet or server is not the test.
Can I hold crypto in a SIPP or pension?
Mainstream UK SIPP providers do not generally offer direct holdings of cryptoassets, and indirect exposure through listed products raises its own permitted-investment questions. Separately, from 6 April 2027 unused pension funds are expected to come within the inheritance tax net, which removes much of the traditional planning attraction. Take specific advice rather than assuming a wrapper is available.
How do executors value crypto for probate?
At open market value in sterling at the date of death, with a documented price source for each token, applied consistently, and a schedule of every wallet and account with its balance. Illiquid tokens need a reasoned valuation basis. Keep the working papers: HMRC can and does question crypto valuations.
This page is general guidance on UK tax law as at 10 August 2026 and is not advice for any particular case. Inheritance tax and estate planning frequently require legal advice alongside tax advice, and we work with your solicitor rather than replacing them. HMRC's internal manuals are guidance for HMRC staff, are not law, and do not bind HMRC in an individual case. Reviewed by the TaxDigit crypto tax team. Updated August 2026.
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