Legal News | 12.06.25

Bitcoin: decrypting your tax obligations

In May this year, Nigel Farage announced that Reform UK would accept party donations in the form of Bitcoin. They will be the first political party in the UK to do so but have you (or Reform) thought about the tax implications of doing so?

HMRC does not consider cryptoassets to be currency or money. They can take an array of forms but include cryptocurrencies, such as Bitcoin.

The tax treatment of cryptoassets is novel and complex but, in simple terms, HMRC views the profit or loss made on dealing in cryptoassets as within the charge to capital gains tax (“CGT”). The sale of a Bitcoin (or a donation of Bitcoin to a political party) amounts to a disposal of the asset for CGT purposes, which can potentially lead to a chargeable gain and corresponding liability to UK tax. For the tax year 2024/5, self-assessment tax returns will include a section for declaring cryptoasset returns, which should be completed if a disposal triggers a charge to CGT. However, many individuals may still be unaware of their historic tax and reporting obligations.

The inheritance tax (“IHT”) treatment of such assets is no less significant. Cryptoassets are considered property for the purposes of IHT and therefore subject to IHT on a person’s death. The location of a cryptoasset (which can be material for those not considered ‘long-term residents’ of the UK) will need to be determined and may potentially be very complex.

With a new tax reporting framework coming into force next year for cryptoasset service providers, HMRC will be in a stronger position than ever to link crypto transactions and enforce individuals’ tax obligations. The Private Client Team at Wansbroughs can help you understand and plan for your cryptoassets, both during your lifetime and as part of your estate on death. Please reach out to us at wealth@wansbroughs.com to find out more.