Crypto Gifting to Son and CGT / Inheritance tax

I’m looking to Gift Crypto to my son (22 yrs old). As an example, I have 1 Bitcoin which I bought for £20k. I gift to my son. On the day I gift it’s worth £30k. My assumes are: • I have to pay CGT on the £10k profit – as part of my self-assessment. • My son has no CGT to pay at that time • Assuming I live another 7yrs, there will be no inheritance tax • My son would have to pay CGT if/when he sells it. • I would need to formally write a letter indicating I have gifted the 1 Bitcoin (BTC) Questions: 1. Are my assumptions correct? 2. Is there anything else I’m missing?

Any thoughts?

Hi
Yes you are correct on all points.

Hi philipn,
Crypto currency is an asset, just like any other and as such, is taxable.
Gifting crypto currency to your children or anyone other than your spouse or civil partner, may result in  you generating a capital gain on their disposal.
There are also inheritance tax implications, should you die within 7 years of the transfer.
Please have a look here for more information:
Capital Gains Tax
Inheritance Tax
Thank you.

 

Thank your for the response. A few clarification questions: - I just wanted to clarify does my son only need to fill out a capital gain - self assessment once/if they dispose of the 30k bitcoin asset, and then pay CGT on the asset at that time. - if i live for 7 years - no inheritance tax on the asset - if i die within 7 years, how would the CGT paid he may have paid relate to the inheritance tax? thanks

Hi
If you live for 7 years after gifting the crypto, then there is no inheritance tax arising on this gift.  Your son would work out if there is a capital gain at the time he disposes of the crypto, using the market value of the crypto at the time it was gifted to him.  You would work out the difference betwees what your acquired the crypto for and the market value of the gift at the time of disposal, minus costs.  You would pay capital gains tax after the annual exempt allowance is applied.  Any gain would be reported either using the online service or in a self assessment tax return.
If you die within the 7 year window, the market value of the gift is added to your estate to allow the calcualtion of inheritance tax.

I’ve just read through this thread. Just so I understand, if I gift any amount of cryptocurrency to my civil partner, is that tax-free? For example, if I gave her £100,000 worth of crypto, does that mean that she would then have to pay tax on it, or is it completely tax-free for both parties?

Hello, My friend (residing in EU, not my relative or partner) gifted me crypto in late 2023-2024, the total as calculated at the time of gifting was ca £9,000. I have cashed out ca £5,900. The current total value of the remaining crypto is at present ca £4,000. Do I undestand correctly that if I cash it out now (before the end of the tax year), I do not need to pay CGT? My calculations: - The total value of gifted crypto at the time of gifting: £9,000. Market value of the gift at the time of disposal: £5,900 + £4,000 = £9,900. My capital gain: £9,900 - 9,000 = £900. Am I correct and do I need to report this gain through the online service or self assessment?

Hi,
The transfer of assets between spouses and civil partners are not taxable.  If you transfer the crypto to your civil partner, there is no captial gains liability on the transfer.  
Your partner will acquired the crypto at the value you acquired it for, so that when she sells the crypto, the difference between the disposal value and the acquisition value is either a gain / loss.  
The gain would be taxable and would be reported using the realtime transaction service at:
Self Assessment tax returns
Losses would need to be claimed either in a self assessment tax return or in writing.
Thank you.

Hi HMRC_user,

You take the market value of the crypto at the time it was gifted to you and convert to pounds sterling, using a just and reasonable exchange rate. You then take the value of the crypto disposed of and convert to pounds sterling. Deduct the acquisition value and costs from the disposal value. If you are left with a positive figure, you have a gain.  

In 2023 to 2024, the annual exempt allowance for capital gains is £6000. If your gain is below this figure, there is not Capital Gains Tax to pay.

Thank you.