Crypto counts as property in your estate and is taxed at 40% above the £325,000 threshold — and without your keys, it may be lost entirely. A practical guide to inheritance tax and estate planning for UK crypto holders.
Important Risk Warning
This is not financial advice. Cryptocurrency investments are highly volatile. The value of your investment can go down as well as up, and you could lose all the money you invest. Don't invest unless you're prepared to lose all the money you put in.
London — Here's a question most crypto investors have never sat with: if you died tomorrow, could anyone actually get to your coins? And if they could, do they know HMRC would want 40% of everything above your tax-free threshold?
Both halves of that question matter, because crypto fails at inheritance in two distinct ways. The legal one, where tax goes unplanned. And the practical one, where the assets are simply lost because nobody can find the keys.
Yes. HMRC treats cryptoassets as property, and they form part of your estate for inheritance tax purposes like any house, share portfolio or savings account. Since December 2025 that position has statutory backing: the Property (Digital Assets etc) Act 2025, which received Royal Assent on 2 December, confirms that digital assets including crypto-tokens can be objects of personal property rights under the law of England and Wales.
The mechanics follow the standard IHT rules on gov.uk. Your holdings are valued at market price on the date of death. That value joins everything else in the estate, and if the total exceeds the £325,000 nil-rate band, IHT is charged at 40% on the excess — subject to the usual reliefs, like the residence nil-rate band and the full exemption for anything left to a spouse or civil partner.
Crypto's volatility makes this uglier than it sounds. An estate valued on a market peak can owe tax calculated on prices that have halved by the time probate completes. The executor still owes the bill based on the date-of-death snapshot.
A tax bill is at least a solvable problem. Permanently inaccessible coins aren't. If you self-custody and nobody knows your seed phrase exists, let alone where it is, your holdings effectively vanish on your death. No court order recovers a hardware wallet PIN.
The fix is awkward because the obvious move — writing your seed phrase into your will — is a genuinely bad idea. A will becomes a public document after probate. The workable pattern is separation: your will says what you own and who gets it; a separate, securely stored document (a sealed letter with your solicitor, a safe deposit arrangement, a proper inheritance feature on a custody platform) says how to access it. Your executor needs to know both documents exist. That's it. Most of the horror stories trace back to skipping that one conversation.
Exchange-held crypto is somewhat easier — executors can approach the platform with a death certificate and grant of probate — but policies vary, and overseas platforms can be slow to the point of obstruction.
The standard estate-planning toolkit applies, because crypto is just property.
Lifetime gifting works: give crypto away, survive seven years, and it falls out of your estate entirely. The catch many people miss is that gifting crypto to anyone other than your spouse is also a disposal for capital gains tax at market value — so a large lifetime gift can trigger a CGT bill today in exchange for an IHT saving later. With the CGT exempt amount at just £3,000, that trade-off needs actual arithmetic, not vibes.
Trusts can hold cryptoassets, and some families use them for exactly this. They bring their own tax regime and running costs, so they're specialist-advice territory rather than a weekend project.
And the simplest move of all: keep records. Acquisition dates, costs, wallet addresses, exchange accounts. Executors must report cryptoassets in IHT returns, and reconstructing a dead person's portfolio from scraps is slow, expensive and easy for HMRC to challenge.
Inheriting crypto resets the capital gains clock. The beneficiary's acquisition cost becomes the market value at the date of death, so if they sell, swap or gift the coins later, CGT applies only to growth from that point — reportable through self-assessment once gains pass £3,000 in a year.
If there's one thing to take from all this, it's that crypto estate planning is mostly about admin, not cleverness. A will that mentions your digital assets, an access document stored separately, and a record of what you hold. An hour of boring work that determines whether your coins become a legacy or a cautionary tale.
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