How Do Digital Assets Work In Inheritance In The UK?

Digital assets are property and assets that people own online and which have real financial value. These include cryptocurrencies like Bitcoin and Ethereum, stocks held in trading apps, or investments through online crowdfunding platforms. They are not physical, but in the UK they are treated as property and must be included in a person’s estate when they die.

More and more people now own these assets. In 2025, around 9% of UK adults, about 5 million people own some form of cryptocurrency. This shows that digital assets are no longer rare and will increasingly be part of inheritance planning.

 

How Are Digital Assets Valued?

 

When a person dies, the executor of the estate has to value everything the person owns. This includes digital assets. The value used is the market value on the date of death. This is straightforward for traditional bank accounts but much harder for assets like cryptocurrency, where prices change by the second.

For example, Bitcoin might be worth £30,000 one day and £27,000 the next. If someone dies on the day when prices are high, the estate may face more inheritance tax. In the UK, inheritance tax is usually 40% on anything above the £325,000 nil-rate band, though this threshold can be higher if the family home is passed to children or grandchildren. Executors must be very careful when reporting these values to HMRC.

 

Who Decides Who Gets Digital Assets When Someone Dies?

 

The person who has died can leave digital assets to specific people in their Will. If the Will is clear, the executor simply follows these wishes. If digital assets are not mentioned, then according to this article by Provira, then they will usually be treated as part of the general estate and divided according to the wider terms of the Will.

If there is no Will at all, then UK intestacy laws apply. These laws set out which relatives inherit property, usually starting with a spouse or civil partner and children. In this case, digital assets will follow the same rules as physical property.

Challenges With Digital Assets

 

Unlike traditional assets, digital ones come with big practical problems. Many families do not even know these assets exist because there are no paper records. Even if they do, access is often locked behind passwords, seed phrases, or security questions. Without this information, valuable assets may be lost forever.

Globally, it is estimated that around £23 million worth of cryptocurrency is lost every day because heirs cannot access it. In the UK, only about 7% of Wills currently mention digital assets. This shows just how often they are forgotten in estate planning, leaving families at risk of missing out on wealth that legally belongs to them.

 

Legal Considerations With Digital Assets in The UK

 

In UK law, digital assets are treated as property and so are subject to inheritance tax and capital gains tax. Executors must report them in the same way they would with property, money, or shares. The problem is that because digital assets are new, the law is still catching up, and some areas remain uncertain.

For example, it can be unclear where an asset is legally “located.” If someone holds crypto in an exchange based abroad, questions may arise over whether UK or overseas law applies. There is also no relief if the value of crypto drops suddenly after death, meaning families may pay tax on money they never actually receive.

 

Planning Ahead to Protect Digital Legacies

 

The best way to avoid problems is through careful planning. People should create a record of their digital assets, where they are stored, and how they can be accessed. This information should not be written in the Will itself, since Wills become public after probate, but it can be stored securely with a solicitor or trusted advisor.

Using safe storage options like hardware wallets, or services that allow multiple people to authorise access, can also help. Some online platforms now let users set up a “legacy contact” who can manage the account after death. Taking steps like these makes it far more likely that digital assets will be passed on as intended.

Digital assets are now part of everyday life in the UK. With 9% of adults owning cryptocurrency and millions more using online investment platforms, inheritance planning cannot ignore them. But they are harder to value, harder to access, and not always covered clearly by current laws.

Families who plan ahead, make clear Wills, and leave safe instructions for access can ensure that digital assets are passed on smoothly. This avoids tax problems, reduces stress for loved ones, and protects wealth that might otherwise be lost forever.