Crypto Tax Advice

Investing in cryptocurrencies can be a dangerous business if you do not know what you are doing. It can also be just as risky if you do not include
any tax planning as part of your Will arrangements. Obtaining crypto tax advice should form a crucial part of your strategy.

You really must think about making a plan for when you pass ways, as your legacy could cause severe tax problems for your loved ones.

Maybe you should spend time considering this Instead of worrying the ups and downs of the crypto world. You may be of an age when thinking about the obvious is near the bottom of your action list, however figures from The Financial Conduct Authority’s (FCA) show that over 70% of crypto users are over the age of 35. Individual investors in these age groups should consider making or amending their Wills to ensure that their digital assets are handled properly in the case of their death.

Your Tax Liability

From a tax perspective, HMRC has confirmed that crypto assets can be subject to inheritance tax at death, at a rate of up to 40% on their value immediately before the investor’s death.

Without a digital Will providing instructions, the executors of your estate face the potentially bleak prospect of trying to establish how to gain access to your digital wallets and their cryptocurrency exchange accounts.

Executors may not be able to access the cryptocurrencies at all, making it an impossible assignment. In these cases, the executors will need to show HMRC that those digital assets are irrecoverable and thus worthless.

It’s unclear whether HMRC would accept such an argument without question. The crypto assets are still on the blockchain and may still have value; the only difference is that they can’t be accessed. It’s likely that the executors will have the burden of evidence in convincing HMRC that the secret key cannot be recovered. Volatility is another source of danger for the executors of a crypto investor’s inheritance. This is a regular occurrence. Executors may finally gain access to your cryptocurrency holdings, only to discover that the value of the assets in your crypto wallet has plummeted.

Unlike investments in stocks and property, there are no inheritance tax exemptions for your crypto losses. If you want to avoid your executors getting slapped with a tax bill that wipes away the value of the estate, you should invest in a digital Will.

For crypto tax advice, and any other tax assistance, please get in touch HERE of you can call 0203 755 2863