The ICAEW says HMRC is writing to agents who have previously submitted inheritance tax (IHT) returns to raise awareness of the requirement to account for IHT on cryptoassets. Any returns that contain an error should be corrected, the regulatory body said.
Writing in its Insight blog, ICAEW advises that HMRC’s cryptoassets manual explains that cryptoassets are property for the purposes of IHT (CRYPTO25000).
“HMRC is concerned that some agents may not fully understand the implications of this, leading to errors in, or the non-filing of IHT returns,” the ICAEW said.
“The objective of the letter is to strengthen agents’ knowledge of the IHT treatment of cryptoassets and to improve awareness of the issue among both agents and personal representatives.”
The letter asks agents to check with clients whether there are cryptoasset holdings to be reported for IHT purposes, ensure those assets are reported as ‘Other Assets’ in Box 76 of the IHT400, and liaise with personal representatives to amend any IHT returns submitted previously which contain an error, quoting OTM000752 in the cover letter with the corrective account.
“Cryptoassets may create unique issues where the private key has been lost or not passed on,” the ICAEW explained.
“Valuation issues may also arise where the value of the cryptoassets has fallen since the date of death, as there is no specific fall-in-value relief (as there is for land and shares).”
The ICAEW says HMRC has indicated that it does not intend to seek penalties for amendments regarding cryptoassets made in response to this campaign, but HMRC may apply penalties if returns are not amended and HMRC subsequently opens an enquiry and identifies underpaid tax.
The taxation of cryptoassets is coming under increased scrutiny, the ICAEW advised. The organisation has several resources available with further information:
For the taxation of crytpoassets in general, listen to the podcast Taxing times: cryptoassets in the spotlight | ICAEW; for key points for individuals, see TAXguide 01/2024; guidance on completing the capital gains tax pages of the self assessment tax return for 2024/25 is available in the article CGT tips for 2024/25 tax returns | ICAEW; and for the cryptoasset reporting framework, which will begin to be implemented in the UK from January 2026, see the article What’s CARF got to do with it? | ICAEW.
