HMRC’s Wealthy Team is currently sending nudge letters to tax agents regarding the inclusion of cryptoassets when completing inheritance tax forms (IHT400s).
What you need to know:
HMRC is reminding agents that cryptoassets such as Bitcoin, Ethereum, and other digital currencies must be properly declared and valued when preparing inheritance tax returns.
These assets form part of the deceased’s estate and are subject to inheritance tax in the same way as other assets.
Why Is This Important?
Cryptoassets are treated as assets for UK tax purposes.
When someone passes away, any crypto assets they owned form part of their estate and must be included in the inheritance tax calculation. With digital currencies having experienced significant value fluctuations, these assets can represent a considerable portion of an estate’s value.
Failing to declare cryptoassets can result in underpaid inheritance tax, leading to penalties and interest charges and potentially delays in the administration of the estate.
Key considerations for executors
When dealing with an estate that includes cryptoassets, executors should:
- Identify all digital assets: Check emails, documents, and digital devices for evidence of cryptocurrency holdings, exchange accounts, or digital wallets.
- Obtain valuations: Cryptoassets must be valued at their fair market value in pounds sterling on the date of death. Given the volatile nature of cryptocurrency markets, professional advice may be necessary to ensure accurate valuation.
- Secure access: Cryptoassets are often protected by private keys and passwords. Executors will need to gather comprehensive documentation to access and properly report these assets.
- Report correctly: Ensure all cryptoassets are declared on the IHT400 form, with appropriate supporting documentation.
Increased reporting from 2026
From January 2026, crypto exchanges and service providers operating in the UK will be required to collate and report customer data and transaction information to HMRC under the Crypto Asset Reporting Framework (CARF).
This enhanced data sharing means HMRC will have greater visibility of cryptocurrency holdings, making accurate reporting more important than ever.
How Ormerod Rutter can help
Managing the tax implications of cryptoassets, whether for inheritance tax, capital gains tax, or income tax purposes can be complex. Our expert team has experience in dealing with digital assets and can provide guidance on the tax treatment of cryptocurrency transactions. Contact them today on 01905 777600 or email hello@ormerodrutter.co.uk
For more detailed information on how cryptoassets are taxed, please visit our Crypto-Tax Guide.
