Do I Have to Pay Tax on Crypto Gifted from Abroad

At Towerstone, we provide specialist crypto accountancy services for UK investors and businesses. We have written this article to explain UK tax treatment, helping you understand the tax and reporting position.

This is a question I am seeing far more frequently, and from experience it usually arises when someone receives cryptocurrency from a family member overseas, a partner who lives abroad, or even as part of a wider family wealth transfer. Crypto feels borderless, informal, and detached from traditional systems, so in my opinion it is completely understandable that people assume gifts from abroad sit outside the UK tax net. Unfortunately, that assumption can be very expensive.

In this article I am going to explain clearly whether you have to pay tax in the UK on cryptocurrency gifted from abroad, what taxes may apply, how HMRC looks at overseas crypto gifts, and where the real risks and planning opportunities lie. Everything here is grounded in current UK rules and real world practice, particularly the approach taken by HM Revenue and Customs and the regulatory framework overseen by Financial Conduct Authority.

This is intentionally a detailed guide. In my opinion, international crypto gifts sit right at the intersection of tax, residency, and record keeping, and getting even one of those wrong can lead to penalties years later.

The Starting Point Most People Get Wrong

From experience, the most common misconception is this:

“If the crypto comes from abroad, the UK cannot tax it.”

In my opinion, that belief comes from mixing up where the crypto comes from with where the recipient is tax resident. For UK tax purposes, the key question is almost always about you, not the person gifting the crypto.

If you are UK tax resident, HMRC is interested in:

• What you receive

• Why you receive it

• Whether it gives rise to income, gains, or inheritance tax exposure

The fact that the crypto originates from overseas does not automatically make it tax free.

How HMRC Views Cryptocurrency

Before looking at overseas gifts specifically, it is important to understand how crypto is treated in general.

HMRC does not treat cryptocurrency as money or foreign currency. It is treated as an asset, similar to shares or investment property.

That classification drives everything that follows.

From experience, this means crypto is subject to:

• Capital Gains Tax when you dispose of it

• Income Tax if it is received as income

• Inheritance Tax in certain circumstances

Receiving crypto as a gift does not remove it from these frameworks.

What Counts as a Crypto Gift From Abroad?

A crypto gift from abroad usually means:

• Cryptocurrency transferred to you without payment

• The sender is not UK resident

• The transfer is not linked to work or services

Examples I see in practice include:

• Parents overseas gifting Bitcoin to adult children in the UK

• A non UK partner transferring crypto as a personal gift

• Crypto gifted as part of wider family wealth planning

• Relatives abroad passing on long held crypto holdings

From experience, the intention behind the transfer matters just as much as the mechanics.

The Big Question: Is the Gift Itself Taxable?

In most genuine gift situations, receiving cryptocurrency as a gift is not itself taxable at the point you receive it.

That means:

• No immediate Income Tax

• No immediate Capital Gains Tax

• No immediate charge just because it arrived

In my opinion, this is the point where many people stop reading and assume everything is fine. Unfortunately, that is only half the story.

Why Receiving the Gift Is Usually Not Taxed

The UK does not generally tax recipients on the value of gifts they receive.

This applies whether the gift is:

• Cash

• Shares

• Property

• Cryptocurrency

From experience, the UK focuses taxation on what happens after you receive the asset, not the act of receiving it.

However, this only holds true if the gift is genuinely a gift.

When a “Gift” Is Not Really a Gift

HMRC looks at substance over labels.

If crypto is described as a gift but is actually:

• Payment for work

• A reward for services

• Linked to employment

• Part of a business arrangement

Then Income Tax and potentially National Insurance can apply immediately.

From experience, this comes up where people receive crypto from overseas businesses, founders, or employers and assume calling it a gift avoids tax. It does not.

Income Tax Risks With Overseas Crypto Transfers

If HMRC considers the crypto to be income, then:

• Income Tax applies based on your UK tax bands

• The overseas origin is largely irrelevant

• Reporting obligations apply

In my opinion, this is one of the biggest risk areas because the line between gift and reward is not always clear.

Capital Gains Tax: Where the Real Tax Usually Appears

While receiving the crypto is usually tax free, Capital Gains Tax often arises later.

This is the part people miss.

When you later sell, swap, or spend the crypto, HMRC looks at:

• The value when you dispose of it

• Less the value when you acquired it

For a gifted asset, your acquisition value is usually the market value at the date you received the gift.

From experience, this means the tax point is delayed, not eliminated.

Example

Let me explain this in practical terms.

You receive crypto from a relative abroad worth £20,000 at the date of the gift.

At that point:

• No tax is due on receipt

Two years later, you sell the crypto for £35,000.

For Capital Gains Tax:

• Acquisition value is £20,000

• Disposal value is £35,000

• Gain is £15,000

That £15,000 is potentially taxable.

In my opinion, this delayed tax effect is why overseas crypto gifts often feel tax free initially, but are not in the long run.

What If the Crypto Was Worth Less When Gifted?

If the crypto falls in value after you receive it, you may make a loss.

From experience:

• Losses can sometimes be used against other capital gains

• Record keeping becomes critical

Timing really matters with volatile assets like crypto.

Does the Donor’s Tax Position Matter?

This is another area of confusion.

For UK tax purposes, the donor’s tax position overseas does not usually affect your UK tax.

Whether the donor:

• Paid tax in their own country

• Declared the gift locally

• Is subject to gift taxes abroad

Does not change how HMRC treats you.

However, double tax issues can arise in rare cases, which is why international advice may be needed for large gifts.

Inheritance Tax and Overseas Crypto Gifts

Inheritance Tax is where things become more nuanced.

If the Donor Is Alive

If the overseas donor is alive, the gift is usually treated as a lifetime gift.

From your perspective as the recipient:

• No immediate inheritance tax

• No reporting obligation at receipt

Inheritance tax focuses on the donor’s estate, not yours.

The Seven Year Rule Still Applies

If the overseas donor later dies, the gift may still be relevant for inheritance tax in their home country.

From the UK side:

• UK inheritance tax generally applies based on the donor’s domicile

• Not the location of the asset

In my opinion, cross border inheritance tax is one of the most complex areas of all.

If the Donor Dies Shortly After the Gift

If the donor is UK domiciled or deemed domiciled, the crypto gift may fall back into their estate if they die within seven years.

If the donor is not UK domiciled, UK inheritance tax may not apply at all.

From experience, this is where assumptions are dangerous and advice is essential.

Does UK Residency of the Recipient Matter?

Yes, very much so.

If you are UK tax resident:

• UK tax rules apply to your gains

• Worldwide assets are within scope

If you are non UK resident:

• Different rules may apply

• UK tax may not arise on disposal

In my opinion, residency status should always be checked before assuming tax outcomes.

The Remittance Basis Myth

Some people assume overseas crypto gifts fall under remittance rules.

In most cases, this is incorrect.

Crypto is not treated like offshore cash in a foreign bank account.

If you are UK resident and not using the remittance basis, worldwide gains are taxable regardless of where the crypto originated.

Even under the remittance basis, crypto rules can be complex.

Record Keeping Is Non Negotiable

From experience, HMRC’s biggest concern with crypto is transparency.

If you receive crypto from abroad, you should keep:

• Date of receipt

• Market value in GBP on that date

• Wallet addresses involved

• Evidence it was a gift

• Identity and residency of the donor

In my opinion, poor records are the biggest trigger for disputes.

HMRC and Overseas Crypto Visibility

It is important to be realistic.

HMRC has significantly increased its ability to track crypto, including:

• Information sharing with exchanges

• Data matching exercises

• Requests for wallet histories

In my opinion, assuming overseas crypto is invisible is outdated thinking.

Common Mistakes I See in Practice

From experience, the most common mistakes include:

• Assuming overseas gifts are tax free forever

• Failing to record market value on receipt

• Treating gifts as income incorrectly or vice versa

• Ignoring Capital Gains Tax on disposal

• Not declaring gains because “it came from abroad”

These mistakes are rarely deliberate, but they are costly.

Planning Opportunities That Do Exist

Despite the risks, there are legitimate planning opportunities.

These may include:

• Timing disposals to use CGT allowances

• Using spouse transfers where appropriate

• Managing income levels in disposal years

• Coordinating crypto with wider tax planning

In my opinion, crypto should never be planned in isolation from the rest of your finances.

What About Large or Repeated Gifts?

Large or repeated overseas crypto gifts can attract more scrutiny.

HMRC may ask:

• Why the gifts were made

• Whether they represent income

• Whether they form part of a wider arrangement

From experience, consistency and documentation matter.

Practical Steps I Recommend From Experience

If you receive crypto gifted from abroad, I recommend:

• Confirming your UK tax residency

• Establishing whether the transfer is genuinely a gift

• Recording the GBP value on receipt

• Keeping all wallet and transaction evidence

• Planning ahead for future disposals

These steps dramatically reduce risk.

Is It Ever Completely Tax Free?

In my opinion, the idea of overseas crypto gifts being permanently tax free is usually a myth.

The gift itself may be tax free on receipt, but future tax is often unavoidable.

The key question is not “do I pay tax now” but “when and how will tax arise”.

Key Takeaways

So do you have to pay tax on crypto gifted from abroad? Usually not at the moment you receive it, provided it is a genuine gift. However, that does not mean the crypto sits outside the UK tax system.

From experience, the most common and costly error is assuming that overseas origin equals tax exemption. It does not. Once the crypto belongs to you and you are UK tax resident, HMRC is interested in what you do with it next.

In my opinion, overseas crypto gifts should be treated with the same care as any other valuable asset entering your financial life. With good records, clear intentions, and proper planning, tax can be managed and surprises avoided. Without that discipline, what feels like a generous gift can quietly turn into a future tax problem.

If you would like to explore related investing and crypto guidance, you may find Do I have to pay tax on cryptocurrency in the UK and Do I need an accountant to handle my crypto tax return useful. For broader investing context, visit our stocks and shares guidance hub.