Inheritance Tax on Cryptocurrency

Do you pay inheritance tax on cryptocurrency?

Often, but not always. Inheritance tax looks at the value of the whole estate, not any single holding, so cryptocurrency is taxed only where the total estate exceeds the available nil-rate bands. The ordinary nil-rate band is £325,000 per person, and tax is charged at 40% on value above the combined bands (gov.uk, as at July 2026, subject to change). Many estates fall within the bands and pay nothing.

How is cryptocurrency valued for inheritance tax?

Cryptoassets are valued at their open-market worth on the date of death, in the same way as other assets, and added to the estate. For assets without a fixed price you work out what you would have got if you had sold them on that day, which for crypto usually means the market price on an exchange (gov.uk, valuing an estate, as at July 2026, subject to change). Because prices can move sharply, the date-of-death figure can differ from the value when the estate is finally distributed.

Allowance or rate	Level (July 2026)
Nil-rate band (per person)	£325,000
Residence nil-rate band	Up to £175,000
Standard rate	40%
Reduced rate (10%+ to charity)	36%
Taper threshold	£2,000,000

Allowance or rate

Level (July 2026)

Nil-rate band (per person)

£325,000

Residence nil-rate band

Up to £175,000

Standard rate

40%

Reduced rate (10%+ to charity)

36%

Taper threshold

£2,000,000

Source: gov.uk/inheritance-tax. These figures are fixed until the end of the 2030-31 tax year (5 April 2031) (gov.uk), as at July 2026 and subject to change. The residence nil-rate band applies to a home passing to descendants, not to crypto. See our fuller guide to Inheritance Tax Explained.

Why crypto counts as estate property

HMRC guidance is clear that cryptoassets are property for the purposes of inheritance tax, so they are not treated as some special category that sits outside the estate (HMRC Cryptoassets Manual CRYPTO25000, as at July 2026, subject to change). That means a holding of Bitcoin or Ether is added to your bank accounts, investments, home and other assets, and the combined figure is measured against the tax-free bands.

Where the crypto is held also matters for some people. For exchange tokens, HMRC generally treats the location, or situs, of the asset as following the residency of the beneficial owner, which can affect the position for those who are not long-term UK residents (HMRC Cryptoassets Manual CRYPTO22600, as at July 2026, subject to change). For a UK resident, the general position is that worldwide assets, including crypto, can fall within the inheritance tax net.

For the wider framework, see our estate planning guide.

The access problem: keys, wallets and records

Crypto is taxed as part of the estate whether or not anyone can reach it, which is where many families run into difficulty. If the private keys or seed phrase are lost, the coins may be counted for inheritance tax yet be impossible to sell to help pay the bill. Tax is charged on the value of what was owned at death, not on what beneficiaries can actually access (gov.uk, valuing an estate, as at July 2026, subject to change). Keeping a secure, private record of holdings, separate from the keys themselves, is one step many people take.

A worked example (illustration only). A widower dies owning Bitcoin worth £220,000 at the date of death, a share portfolio of £150,000, and other assets of £120,000, so £490,000 in total, and leaves everything to his son. His late wife left everything to him, so her unused band may transfer. On his death the estate could draw on two nil-rate bands of £325,000 each, up to £650,000 combined (gov.uk, as at July 2026, subject to change). In this illustration the £490,000 estate could fall within those bands, so no tax would arise. But the crypto is still valued at its £220,000 date-of-death figure (gov.uk, as at July 2026, subject to change), and if the keys were lost the son might struggle to realise it. Change the figures, the ownership or the beneficiaries and the answer changes, so this is general information rather than a calculation for any real estate.

Can you give crypto away to reduce inheritance tax?

Giving cryptocurrency away during your lifetime is possible, and an outright gift with no strings attached can fall outside your estate if you survive seven years, with taper relief possible on the tax due where a gift is made three to seven years before death (gov.uk, rules on giving gifts, as at July 2026, subject to change). Each person also has an annual gift exemption of £3,000 (gov.uk, as at July 2026, subject to change). None of this can guarantee a saving, because other taxes and practical risks also arise.

A gift of crypto to anyone other than a spouse or civil partner is generally a disposal for capital gains tax, so a gain can be taxed even though no cash changes hands, and the recipient takes on the security burden of holding it safely. Because the picture spans more than inheritance tax, it is one option some consider only after taking advice. It can be worth discussing with a solicitor, a STEP practitioner or an accountant before acting.

The seven-year rule. An outright gift of crypto may fall outside the estate if you live seven years after making it.

Capital gains tax. Gifting crypto can be a disposal, so a gain may be taxed separately from inheritance tax.

Practical risk. Once transferred, the keys and the security responsibility pass to the recipient, which needs weighing.

Cryptocurrency and inheritance tax in Scotland and Northern Ireland

Inheritance tax is a UK-wide tax, so the £325,000 nil-rate band and the 40% rate apply to cryptoassets across Scotland, England, Wales and Northern Ireland alike (gov.uk, as at July 2026, subject to change). What differs is the surrounding succession law. Scotland has its own rules, including legal rights that can give a spouse and children a fixed share of the moveable estate, which would include crypto, and it uses confirmation rather than a grant of probate. Where an estate touches more than one UK nation, it can be worth taking advice in each. For the wider picture, see our estate planning guide.

Frequently asked questions

Is cryptocurrency subject to inheritance tax in the UK?

Generally yes, where the estate is large enough. HMRC treats cryptoassets as property, so coins and tokens form part of your estate and are taxed at 40% on value above the available bands (HMRC Cryptoassets Manual, as at July 2026, subject to change). Many estates fall within the £325,000 nil-rate band and pay nothing, depending on their total value and who inherits.

How is crypto valued when someone dies?

Cryptoassets are valued at their open-market worth on the date of death, which usually means the exchange price on that day, and added to the rest of the estate (gov.uk, valuing an estate, as at July 2026, subject to change). Because crypto prices can move sharply, the figure used for tax may differ from the value when the estate is finally distributed.

What happens to Bitcoin if the private keys are lost?

The value can still count for inheritance tax even if the coins cannot be reached. Tax is charged on what was owned at death, not on what beneficiaries can access (gov.uk, as at July 2026, subject to change). This is why many people keep a secure, up-to-date record of holdings, stored separately from the keys, so an executor at least knows what exists.

Can I give crypto to my children to reduce inheritance tax?

You can, and an outright gift may fall outside the estate after seven years, with taper relief possible on gifts made three to seven years before death (gov.uk, as at July 2026, subject to change). Because gifting crypto can trigger capital gains tax, it cannot guarantee a saving, so many people discuss it with a qualified professional first.

Do I pay tax when I inherit cryptocurrency?

Usually any inheritance tax is settled by the estate before the crypto reaches you, rather than charged to you as the person inheriting. Later selling the coins can bring capital gains tax into play, which is separate from inheritance tax and depends on any rise in value after death. The position depends on your circumstances, so many people take advice.

Does it matter where my crypto is held?

For exchange tokens, HMRC generally treats the location as following the residency of the beneficial owner, which can matter for those who are not long-term UK residents (HMRC Cryptoassets Manual CRYPTO22600, as at July 2026, subject to change). For a UK resident, worldwide assets including crypto can generally fall within inheritance tax, so cross-border cases can be worth taking advice on.

About Fairchild Oldfield

The Fairchild Oldfield team brings together estate planning, tax, independent financial advice and client care, working with families across England and Wales.

Fairchild Oldfield are estate planning specialists and will writers, not a firm of solicitors. This article is general information based on practical experience, not legal, tax or financial advice.

Important: This article is general information only and is not legal, tax or financial advice. Reading it does not create a professional relationship. It is based on the law of England and Wales, and other UK jurisdictions may differ. Figures and rules are current as at July 2026 and are subject to change. Before acting, many people choose to seek advice from a suitably qualified professional, such as a solicitor, a STEP practitioner, an accountant, or an FCA-authorised financial adviser, who can consider your individual circumstances.