HMRC Chasing Inheritance Tax Due on Cryptoassets

We have been repeatedly reminded you on this website over the last few months that Rachel Reeves and the Treasury, via HMRC and ever higher taxation is coming for our hard earned wealth.

We do not have a direct wealth tax as such but we are paying much more with

• Inheritance tax allowances frozen since 2009
• Hgher stamp rates for high value properties.
• High Value Council Tax Surcharge for properties worth £2m+ in England and £1m+ in Scotland.
• Higher stamp duty rates for all 2^nd, additional and investment properties.
• Higher council taxes, up to double, for personal use additional properties/holiday homes.
• Reduced capital tax allowances.
• A £2.5m cap on Agricultural and Business Property Relief where inheritance tax is payable on any excess i.e., will no longer be inheritance tax free from April 2026.
• An extra 2% income tax rates across all bands for the new Savings Income Tax, Property Income Tax and Dividend Income Tax.

And now there is more scrutiny to come to raise even more inheritance tax (already setting new record tax revenue levels every month).

HMRC’s Wealthy Team has issued letters to tax return agents (including us) to remind agents that cryptoassets are considered as ‘property’ for inheritance tax purposes and should be included in estates as detailed in the HMRC Cryptoassets Manual.

Crypto Hobby or Trade?

Whilst crypto is considered a hobby if you buy and hold for the long term, so should not be included in your self assessment income tax return, but reported for capital gains tax when disposed of but if you are regularly trading, i.e., buying and selling, it is considered a trade and subject to income taxes on profits.

Whether investing in cryptoassets is a hobby or considered a trade, on death the value of cryptoassets should be included in estates by executors of the Will or their agents.  Therefore

• As a hobby, cryptoasset values on death may be subject to inheritance taxes but
• If cryptoasset trading is deemed a trading business (self-employment) by HMRC then on death it may qualify for Agricultural and Business Property Relief.

For more on protecting assets using 16 different types of trust, see

16 Trusts to Protect Wealth