Inheritance Tax on crypto, NFTs and DeFi holdings

On death, the personal representatives list all assets at their market value at the date of death. Cryptoassets — whether held on an exchange or in a self-custody wallet — sit alongside cash, property and investments on the IHT400 (or IHT205 for smaller, excepted estates).

The first £325,000 of the total estate is taxed at 0% under the nil-rate band; another £175,000 may apply where a home is left to direct descendants. Crypto is taxed at the same 40% rate above those thresholds as any other asset — there is no preferential treatment and no special discount.

The Government's announced April 2027 pension-IHT change does not affect crypto's existing IHT treatment; crypto has always been in scope.

For widely traded coins like BTC or ETH the market value at death can be evidenced from major exchange prices on the day. HMRC accepts a reasonable average across leading exchanges — keeping a screenshot of pricing on multiple venues on the relevant day is sensible.

For illiquid tokens, NFTs or governance tokens with thin order books, valuation is much harder. A professional opinion (from a specialist valuer or accountant familiar with cryptoassets) may be needed, and the estate may need to negotiate with HMRC's specialist team.

For wrapped tokens, staked positions, LP tokens or vesting/locked tokens, HMRC has not published prescriptive valuation rules. Common practice is to look through to the underlying economic value (e.g. wETH at ETH market price; an LP position at the value of its share of the pool; locked tokens at a discount reflecting illiquidity), but the approach should be agreed with HMRC's specialist team or supported by a professional valuation, particularly for material holdings.

HMRC's stated view (Cryptoassets Manual CRYPTO22600) is that cryptoassets are situated where the beneficial owner is resident at the relevant time. That position has not been tested in court and could in future be overturned, but it is what HMRC works to.

The Autumn 2024 Budget replaced the old IHT domicile rules with a residence-based test from 6 April 2025 (see HMRC's IHT Manual IHTM47000 onwards). Worldwide assets — including crypto held overseas — come within the UK IHT net once you have been UK-resident for 10 of the previous 20 tax years (the 'long-term residence' rule). Transitional rules apply for some existing residents; specialist advice is sensible where you have a non-UK history.

Executors will need: a complete list of wallet addresses, exchange accounts and DeFi positions; evidence of beneficial ownership (e.g. a wallet recovery seed or signed transaction); market-value evidence at the date of death; and the cost basis if any disposals are later made by the estate.

If the executor disposes of cryptoassets during the administration period (e.g. to pay IHT or distribute), CGT may apply to any further gain between the date of death and the date of disposal — not the lifetime gain, which is wiped out by the death uplift.