Cryptoassets are to be treated as property under English law
A legal statement has confirmed that cryptoassets are to be treated as ‘property’ under English law.
A legal statement by the Chancellor of the England and Wales High Court has confirmed what most probably already thought was the case:
- Cryptoassets (such as BitCoin and Ethereum) are to be treated, from a legal perspective, as ‘property’; and
- Cryptoassets can be owned by an individual.
Whilst seemingly obvious, this is the first time cryptoassets have been recognised in law in the UK and has important and far reaching consequences that are only starting to be fully understood.
In practical terms, what this means for you is that:
- When you die, your cryptoassets will pass in accordance with your will, or in accordance with the intestacy rules if you do not have a will;
- When you die, your cryptoassets will form part of your taxable estate and are subject to Inheritance Tax if you are domiciled in the United Kingdom;
- Cryptoassets can be held in a trust, for example in a trust setup for the benefit of your children or grandchildren; and
- If you lose mental capacity, an attorney acting on your behalf under a registered Lasting Power of Attorney for Property & Financial Affairs would be able to make decisions in relation to your cryptoassets.
Unsurprisingly, the Chancellor’s legal statement reflects the position that HM Revenue & Customs already set out in their online guidance as to the taxation of cryptocurrencies. This makes clear that they believe that cryptocurrencies '…will be property for the purposes of Inheritance Tax'.
This is a fast moving area of law and one that will catch many by surprise if not planned for.
It is clear that cryptoassets, like any other form of property that you own such as cash, investments and real estate, need to be considered as part of any will review or when undertaking a tax or succession planning review.