bitcoin 1024x1024 - Bitcoin and Cryptocurrencies - How do these investments affect your estate?

Bitcoin and Cryptocurrencies – How do these investments affect your estate?

Bitcoin is seen as the World’s first decentralised digital currency that is not held...

Back to News and Events

Bitcoin and Cryptocurrencies – How do these investments affect your estate?

7th December 2019

News : Wills & Probate

Bitcoin is seen as the World’s first decentralised digital currency that is not held physically, also known as cryptocurrency.  Bitcoin is a new and evolving area and its regulatory and legal status is ongoing. It is unique in that they cannot be compared to other investments or payment methods.  Bitcoin is legal in the UK.

Bitcoin operates via a peer to peer network and does not operate through any bank nor is it controlled by any central authority.  All functions are managed collectively by this network.   Bitcoin transactions are recorded on a public database called a ‘block-chain’ which uses decentralized, encrypted datastorage.  New Bitcoin is produced when a new block is attached to the chain.

As well as adding to the chain, Bitcoin can be bought or sold through exchange facilities with recognised currencies.  Bitcoin can be used to buy and sell goods and services where Bitcoin is accepted.  There are now outlets in the UK that do accept such payment.

Tax Advice –   the treatment of VAT in Bitcoin at this stage is provisional pending further development and HMRC have issued brief guidelines in respect of VAT which is due in the normal way from suppliers of goods and services.

Activities involving Bitcoin may be subject to Capital Gains Tax (CGT) depending on the activity and the parties involved.  Whether any profit or gain is chargeable or any loss allowable will be looked at on a case by case taking account specific facts.  The other consideration with Bitcoin is the question of Inheritance Tax (IHT) and the understanding of where Bitcoin is located.  Bitcoin is only found on the block-chain and is distributed over the digital net and therefore can be found everywhere rather than in a particular country.  Advice from the Revenue is that if Bitcoin is found in an estate, it should be reported to the revenue in the initial IHT form and further instructions will be given.

Sign up to our eMagazine

@POOLEALCOCK

Weve had a 5* review from Ian: Kate Heath and team - once again, amazing https://t.co/QNvMmTlgu2

Posted 29th July 2020

@POOLEALCOCK

Weve had a 5* review from Deborah: Housing & Property https://t.co/HL0n6ZHpLL

Posted 11th July 2020

call icon_laptop_add icon_purchase_new icon_purchase_standard icon_quill icon_remortgage icon_sale_purchase icon_sale icon_tick search tail-right (1)Created with Sketch. tail_right tick_circle_green tick_circle