What IHT Will Be Affected by Cryptocurrency

The Financial Conduct Authority (FCA) estimates that 2.3 million persons in the UK currently own some kind of cryptocurrency asset.

This form of asset is extremely accessible and increasingly usable across a broad range of applications, despite its inherent volatility, which is proving to be highly disruptive in a number of different marketplaces.

But what exactly do we mean by cryptocurrencies, and how will this affect how UK inheritance tax (IHT) is administered and paid? e.”

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What IHT Will Be Affected by Cryptocurrency

What is Cryptocurrency?

Crypto assets are, to put it simply, digital or virtual currencies that are encrypted using cryptography. This makes them extremely secure and nearly impossible to double spend. Decentralized blockchain networks also use fungible crypto assets to promote anonymity and maximize financial inclusion. To create a truly transparent asset class that is mostly immune to manipulation, they use a distributed ledger that is enforced by a dispersed network of worldwide computers.

The most well-known cryptocurrency asset is perhaps Bitcoin (BTC), which is 2009 paved the way for all subsequent tokens. While the market has subsequently developed to encompass a wider range of assets and so-called “stablecoins,” this is based on the blockchain and offers a secure and digital way to make payments online

Factoring Crypto into Your Will

Intriguingly, according to a recent survey by the UK’s Law Society, 93% of those who have a final will and testament haven’t included any language about digital assets or tokens like Bitcoin.

This reveals a critical omission made by UK citizens, one that must be fixed if you wish to successfully manage your estate before your debt.

It’s imperative that you start incorporating crypto holdings into your financial planning and the organization gave this and the crypto asset class’s seemingly unstoppable ascent to prominence as a physical asset class on these shores.

Most importantly, you must make sure that any executor named to manage your estate after your death is aware of your cryptocurrency assets, their worth, and the exact address of the wallet they are kept in.

Even though the value of such assets may change over time in accordance with broader market trends, you must nevertheless record their exact value at the time of writing.

Crypto in the Eyes of HMRC

Cryptocurrencies are recognized as property by HMRC (which oversees the payment of inheritance and its related tax levies).

This means that any cryptocurrency holdings will be included in a deceased person’s taxable estate and subject to IHT if the estate’s overall value is greater than £325,000.

If cryptocurrency holdings do push the value of your departed loved one’s estate beyond the £325,000 cap, they will be liable for 40% IHT.

Before beneficiaries can get their payments or allotted assets, this levy must be resolved. To do this and promote a speedy and efficient settlement, you might need to take out an executor’s loan.


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